Editor’s Note: This is the seventh installment in a series of articles about public pensions in Illinois as the General Assembly grapples with a budget crisis.

With constitutional issues on both the state and national levels, Illinois pension reform faces many legal challenges, an assistant professor of educational administration said during a pension forum May 3.

John Dively, an assistant professor of educational administration, and Derek Markley, the special assistant to the president, addressed the ongoing debate on pension reform during the Council on University Planning and Budget’s third pension forum.

“The way things are working, unless something miraculous happens, I think we can be sure that the Illinois Supreme Court is going to have a shot at this (pension reform) at some point,” Dively said.

According to Article XIII, Section 5 of the Illinois Constitution, benefits for current employees shall not be diminished or impaired.

Dively also cited Article 1, Section 16 of the Bill of Rights stating that no law shall be passed that impairs the obligation of contracts.

“People entered the various retirement systems with the promise that they would be entitled to these pension benefits, and this is a contract case because the state of Illinois entered in to certain promises when you entered your current positions,” he said.

Dively said the state might be able to change the contracted benefits in one’s retirement if reasonable consideration is offered to employees. Consideration is a term meaning the valued benefit bargained for between the contractual parties.

President Bill Perry described consideration as a two-way street where each party brings something to the table.

Markley, who lobbies Springfield for the interests of Eastern, said the pension problem came about from three main factors.

One of the main contributors is having too many costs and not enough revenue in the state budget, he said.

Medicaid issues such as proposing to cut $2.7 billion also factor into the problem, he said.

“Medicaid is poised to cost this state a heck of a lot more than the public pension system ever will,” Markley said. “I tell people if you want to know how fast and furious pension change is going to go, keep an eye on Medicaid because if Medicaid plans for savings starts to tank, that’s when pension will automatically go into higher gear.”

The third contributor is Illinois’ history of weak commitment to fund pensions, he said.

“The pension was seen as a credit card for some years,” he said. “I think borrowing has become a four-letter word in Illinois.”

They also spoke about how Gov. Pat Quinn’s proposed pension reform plan, which he announced on April 20, would affect the university.

Quinn proposed to: increase the employee contribution by 3 percent, increase the retirement age to 67 and reduce the cost of living adjustment to 3 percent or one-half of the Consumer Price Index, whichever is lower.

In addition, Quinn’s plan also proposes phasing in the normal costs burden to employers including public universities, community colleges and school districts. Normal costs are determined by a formula that calculates benefits earned from the employee’s performed service each year.

Perry said Eastern would be looking at paying an additional $20 million if they had to assume the normal costs.

“There is a lot of discussion that if anybody moves for the assumption of normal costs, then universities may be the test case for them to try this out on to see if it works,” Markley said. “Unfortunately, it hasn’t gone much farther than that.”

He said voices for universities’ interests might be harder for legislators to hear when compared to k-12 schools.

“K-12 is really an 800-pound gorilla in state politics,” Markley said. “Every legislator has a school in their district, but not every legislator has a university.”

Rachel Rodgers can be reached at 581-2812 or rjrodgers@eiu.edu.