Illinois General Assembly - Full Text of SB0001
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Full Text of SB0001  98th General Assembly


Rep. Michael J. Madigan

Filed: 5/2/2013





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2    AMENDMENT NO. ______. Amend Senate Bill 1, AS AMENDED, with
3reference to page and line numbers of House Amendment No. 1, by
4replacing line 4 on page 1 through line 9 on page 9 with the
6    "Section 1. Statement and Findings.
7    At the time of passage of this amendatory Act of the 98th
8General Assembly, Illinois possesses a lower credit rating than
9each of the other 49 states. This is a consequence both of
10atypically large debts and of structural imbalances that will,
11unless addressed by the General Assembly, lead to rapidly
12growing debts. The debts include a backlog of bills exceeding
13one-fourth of the State's annual general revenue, and
14approximately $100 billion in unfunded pension liabilities.
15The structural imbalances result from projected growth in
16non-discretionary and formula-driven expenses that
17significantly outpace projected revenue growth. Of the factors



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1that drive this phenomenon, the most substantial by far is the
2rapid growth of the annual pension payment, which increased by
3nearly $1 billion between Fiscal Year 2012 and Fiscal Year
42013, and will again increase by nearly $1 billion between
5Fiscal Year 2013 and Fiscal Year 2014, at which time it will
6consume approximately one-fifth of anticipated general
8    The State has taken significant action to ameliorate the
9State's fiscal troubles. In 2011, the State increased the
10income tax in Public Act 96-1496. Recognizing that increased
11revenue alone would not solve the problem, the State has
12enacted a series of budgets that included deep cuts to
13discretionary programs, including programs that are essential
14in order to provide for the health, safety, welfare, and
15educational development of the people of Illinois.
16    The State has both reduced the size of its workforce and
17reduced discretionary spending. The staffing level is now the
18lowest it has been in at least the last 25 years. Discretionary
19spending from the General Revenue Fund (GRF) has been reduced
20by over $2.8 billion since Fiscal Year 2009, including
21significant reductions for primary and secondary education,
22higher education, public safety, and human services, including
23health care for the poor.
24    In 2010, Public Act 96-889 established a package of pension
25benefits for new employees that has been determined to be among
26the least expensive public employee retirement schemes in the



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1country. It can be argued that the new package of pension
2benefits has placed government employers at a competitive
3disadvantage, and our public universities, which are vital
4educational and economic institutions, have been exposed to a
5significant risk.
6    In the spring of 2012, the General Assembly made
7significant reductions to the Medicaid program in Public Acts
897-687, 97-688, 97-689, 97-690, and 97-691, a series of reforms
9to the Medicaid program that is projected to reduce State debt
10by decreasing services, increasing the rate of taxation of
11tobacco purchases, and accessing available federal funds. The
12reductions include the elimination of a prescription drug
13program for low to middle income seniors, provider rate cuts,
14elimination of health care for adults whose families make above
15133% of the federal poverty limit ($31,322 for a family of
16four), elimination of restorative dental treatments for adults
17covered by Medicaid, and utilization limits on all remaining
18services covered by Medicaid. While the Medicaid reforms will
19result in savings for the State, these reforms have resulted in
20the denial of crucial health care to hundreds of thousands of
21needy citizens, threatening to further destabilize an
22already-troubled safety net.
23    The General Assembly took significant steps to reduce the
24cost of current and retired employee health care costs. With
25Public Act 97-695, the General Assembly eliminated provisions
26that require that retired state employees with more than 20



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1years of service receive a 100% premium subsidy for retiree
2health care coverage after 20 years of service. Beginning with
3Fiscal Year 2014, State employees will be required to
4contribute significantly more toward healthcare premiums,
5copays, and deductibles. However, the backlog of payments to
6providers is estimated to be nearly $1.8 billion at the end of
7Fiscal Year 2013, and providers will continue to experience a
8delayed payment cycle.
9    Notwithstanding these and many other steps and their major
10fiscal, economic, and human impact, the fiscal situation in
11Illinois continues to deteriorate. Cuts as well as the
12inability to pay bills due and owing have had a significant
13impact on each branch of government, units of local government,
14social service providers, and other vendors.
15    Two-thirds of Illinois school districts are deficit
16spending, even after layoffs and programmatic reductions. For
17Fiscal Year 2013, General State Aid payments to school
18districts are currently being prorated at 89% of the calculated
19amount. For Fiscal Year 2014, the Governor's introduced level
20of General State Aid payments would result in a proration of
22    Cuts to the budget of the Department of Corrections have
23resulted in the closing of two major prisons and three Adult
24Transitional Centers. Similarly, the Department of Juvenile
25Justice was forced to close two youth centers. Funding for
26probation services to help break the cycle of recidivism and



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1improve public safety has steadily declined over the past 5
2years due to the fiscal strain on the state budget.
3    Consequently, the coming months and years will necessarily
4see much more action by the State to achieve fiscal
5stabilization. If these steps toward fiscal stabilization do
6not include pension reform to restrain the growth of the annual
7pension payment, the result will be devastating and dramatic
8cuts to education, public safety, human services, and
9transportation. The impact of such actions on the Illinois
10economy, and on the health, safety, welfare, and educational
11development of the people, would likely be extremely severe.
12This harm could include significant economic contraction,
13which would in turn exacerbate the underlying fiscal challenge,
14resulting in a downward spiral of standard of living and likely
15leading to an eventual inability of the State to meet its short
16term statutory and constitutional responsibilities.
17    The General Assembly has held numerous hearings and
18reviewed hundreds of documents detailing the State's pension
19liability problem, probable solutions, and constitutional
20issues with proposed reform. Given that and all of the above:
21    The General Assembly finds that the fiscal crisis in the
22State of Illinois jeopardizes the health, safety, and welfare
23of the people and compromises the ability to maintain a
24representative and orderly government.
25    The General Assembly finds that the pension liability is so
26great, and the State's fiscal condition is so challenged, that



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1it is doubtful whether any set of actions by the State that do
2not include substantial reforms to its pension systems can
3result in the full payment of all promised benefits.
4    The General Assembly finds that in order to truly solve the
5State's pension problem, a reform measure must render the
6pension liability affordable on an actuarially sound funding
7schedule, and it must commit the State to maintaining this
9    The General Assembly finds that the reforms in this
10amendatory Act of the 98th General Assembly are necessary to
11address the fiscal crisis without incurring further severe and
12irreparable harm to the public welfare.
13    The General Assembly finds that this amendatory Act of the
1498th General Assembly constitutes the substantial reform of the
15State's pension systems that, along with a series of further
16steps toward fiscal stabilization, will enable the State to
17credibly promise the full and timely payment of all pension
18benefits without incurring unacceptable harm to other areas of
19State interest.
20    The General Assembly finds that this amendatory Act of the
2198th General Assembly, with its significant cost-savings, its
22institution of an actuarially accepted payment schedule, and
23its historic funding commitment, is reasonable and necessary in
24order to meet these goals and solve the State's pension
25problem."; and



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1on page 11, by replacing lines 4 through 8 with the following:
2"Assembly or any subsequent Public Act, which are prohibited
3subjects of bargaining, nor shall the changes, the impact of
4changes, or the implementation of changes made to Article 14,
515, or 16 of the Illinois Pension Code, or to Article 1 of that
6Code as it applies to those Articles, made by this amendatory
7Act of the 98th General Assembly or any subsequent Public Act
8be subject to interest arbitration or any award issued pursuant
9to interest arbitration."; and
10on page 11, in line 11, by replacing "Act" with "Section"; and
11on page 18, by replacing lines 18 through 21 with the
13"first."; and
14on page 48, in line 12, by replacing "includes" with "include";
16on page 48, by replacing lines 21 through 26 with the
18"make the payments and transfers required to be made by the
19State pursuant to subsections (c) and (d). The State further
20pledges that the State"; and
21on page 49, in line 3, immediately after "Board", by inserting



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1"under this Section"; and
2on page 92, in line 25, by replacing "amended or renewed" with
3"amended, renewed, or terminated"; and
4on page 144, in line 11, by replacing "includes" with
5"include"; and
6on page 144, by replacing lines 20 through 25 with the
8"make the payments and transfers required to be made by the
9State pursuant to subsections (c) and (d). The State further
10pledges that the State"; and
11on page 145, in line 2, immediately after "Board", by inserting
12"under this Section"; and
13on page 162, in line 15, by replacing "amended or renewed" with
14"amended, renewed, or terminated"; and
15on page 171, by replacing lines 5 and 6 with the following:
16"of this phrase is a clarification of existing law."; and
17on page 201, in line 19, by replacing "includes" with
18"include"; and



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1on page 202, by replacing lines 2 through 7 with the following:
2"make the payments and transfers required to be made by the
3State pursuant to subsections (c) and (d). The State further
4pledges that the State"; and
5on page 202, in line 10, immediately after "Board", by
6inserting "under this Section"; and
7on page 217, in line 24, by replacing "amended or renewed" with
8"amended, renewed, or terminated"; and
9on page 262, in line 15, by replacing "includes" with
10"include"; and
11by replacing line 24 on page 262 through line 3 on page 263
12with the following:
13"make the payments and transfers required to be made by the
14State pursuant to subsections (c) and (d). The State further
15pledges that the State"; and
16on page 263, in line 6, immediately after "Board", by inserting
17"under this Section"; and
18on page 276, by replacing lines 7 through 11 with the
20"Assembly or any subsequent Public Act, which are prohibited



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1subjects of bargaining, nor shall the changes, the impact of
2changes, or the implementation of changes made to Article 14,
315, or 16 of the Illinois Pension Code, or to Article 1 of that
4Code as it applies to those Articles, made by this amendatory
5Act of the 98th General Assembly or any subsequent Public Act
6be subject to interest arbitration or any award issued pursuant
7to interest arbitration.; and
8on page 276, in line 14, by replacing "Act" with "Section".