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Quinn Releases Statement After Pension Reform Signing

Gov. Pat Quinn signed pension reform into law this afternoon. Quinn's office issued the following press release about the signing:

Governor Quinn Signs Historic Pension Reform
 
Governors Top Legislative Priority Becomes Law; Will Erase Unfunded Liability and Restore Fiscal Stability to Illinois

CHICAGO
Governor Pat Quinn today signed into law his number one priority
historic legislation that addresses the most critical fiscal challenge
in Illinois by reforming the states pension systems. This comprehensive
pension reform solution will eliminate the states unfunded liability and
fully fund the pension systems, a standard set by the Governor two
years ago.

After inheriting the worst-funded pension crisis in
the nation that was 70 years in the making, Governor Quinn made pension
reform his top priority and worked with legislative leaders and
legislators to pass Senate Bill 1. In June, he proposed a conference
committee to break the ongoing legislative gridlock, and this vehicle
led to the bill he signed today. Earlier this year, the Governor
suspended legislative salaries and refused to accept his own salary
until pension reform was sent to his desk.

Illinois is moving
forward, Governor Quinn said. This is a serious solution to address the
most dire fiscal challenge of our time. I applaud House Speaker Michael
Madigan, Senate President John Cullerton, House Minority Leader Jim
Durkin, Senate Minority Leader Christine Radogno, Senator Kwame Raoul,
Representative Elaine Nekritz, Representative Darlene Senger, members of
the conference committee, and legislators from both parties who made
this day possible. Working together, we will continue to build a
brighter future for the people of Illinois.

Sponsored by Senator
Kwame Raoul (D-Chicago) and Speaker Michael Madigan (D-Chicago), Senate
Bill 1 will eliminate the states unfunded pension liability and fully
stabilize the systems to ensure retirement security for employees who
have faithfully contributed to the systems. All four leaders worked
tirelessly to negotiate and pass this legislation.

The bill would
not have passed without me. I was convinced that standing fast for
substantial savings, clear intent and an end to unaffordable annual
raises would result in a sound plan that will meet all constitutional
challenges," Speaker Madigan said.

"I applaud the Governor for
prioritizing this issue, Senate President Cullerton said. I look forward
to working with him and all legislative leaders to ensure that we
continue on this path of fiscal leadership and bipartisan cooperation."

With
todays bill signing we have staved off a greater crisis, Leader Durkin
said. I am proud many of the significant components are Republican ideas
generated by the conference committee, and my predecessor through
Senate Bill 1. We should place value into Fitch Ratings initial comments
viewing our actions as positive and I am confident this law will
withstand a court challenge and feel it is a major victory for Illinois
taxpayers.

This is a major step forward in putting Illinois on
the path to financial recovery, Leader Radogno said. It is the result of
bipartisan, bicameral negotiations, after a great deal of debate and
discussions. It will demonstrate to the credit rating agencies and job
creators that we are serious about turning Illinois around. This is not
the only step we need to take to get Illinois back on track. But it is a
significant step at a time when doing nothing would only make our
problems worse. Im proud of the bipartisan effort and its result. Now we
need to build on this momentum.

Under the new law, the state
will adopt an actuarially sound funding schedule that requires level
payments and achieves 100 percent funding no later than the end of
fiscal year 2044. To prevent future governors and legislatures from
repeating the same behavior that helped create the pension crisis, the
law includes a funding guarantee, giving retirement systems the right to
go to court if the state fails to make the required payment to the
pension fund.

Under the new law, there will be no reductions in
the pension checks going out to current retirees. The law will also
minimize the impact on the lower-earning, longer-serving employees.
There will continue to be Cost of Living Adjustments (COLA); however,
they will grow at a slower rate. For most employees, the COLA will be
adjusted from the current 3 percent annually compounding increases that
are unsustainable to a new formula based on years of service that
includes protections for lower-earning, longer-serving employees.

For
example, under the new law, a 65-year-old retired state conservation
worker with 20 years of service receiving a $17,000 state pension will
see that grow to about $22,000 over 10 years. Prior to the law, that
would have grown to about $22,400 over 10 years.

Under the new
law, current active employees will see COLA pauses every other year upon
retirement, with the number of pauses determined by current age. The
law also reduces the amount of money current employees pay into their
pensions by one percent.

In addition, pensionable salary will now
be capped at the greater of the Tier 2 salary cap ($109,971 for 2013),
the employees current salary, or the employees salary at the end of an
existing collective bargaining agreement. The cap will increase over
time, based on the consumer price index (CPI). There will also be
graduated increases in retirement age based on the age of the employee,
with a maximum increase of five years. The bill also creates an optional
401(k)-style defined contribution plan that will be available for up to
5 percent of Tier 1 employees. Senate Bill 1 goes into effect on June
1, 2014.

Since taking the oath of office, Governor Pat Quinn has
made pension reform his top priority in order to restore fiscal
stability to Illinois. Unlike his predecessors, he made the full pension
payment each year. In May 2009, Governor Quinn established the Pension
Modernization Task Force, which laid the foundation for future reform
efforts. In 2010, despite intense opposition, he signed into law
sweeping pension reform for new hires to save taxpayers billions of
dollars.

In January 2012, the Governor convened a pension reform
working group to develop a comprehensive solution. Three months later,
Governor Quinn proposed a comprehensive pension reform plan that erased
the unfunded liability, and refused to sign any legislation that didnt
meet that standard. The Governor also released several studies on the
dire impact of pension inaction on education and launched an online
campaign to raise awareness about the pension squeeze and the urgent
need for reform.
In June 2013, the Governor proposed a conference
committee as a vehicle to break legislative gridlock between the two
chambers. He asked the conference committee to forge a compromise that
provided 100 percent funding for the systems, which ultimately became
the legislation he signed today.

In addition, Governor Quinn also
signed Senate Bill 1961 today. Sponsored by Speaker Madigan and Senator
William R. Haine (D-Alton), the bill clarifies that the Attorney
General will represent the pension systems in any court proceedings,
except in cases where the systems are seeking to force the state to make
funding payments. The new law takes effect immediately.