May 15, 2012

Senates Conference Committee Calls for Fair Resolution of Pension Crisis

THE UNIVERSITY Senates Conference (USC), a statutory advisory group to the President and Board of Trustees composed of members of the University Senates of the University of Illinois at Chicago, University of Illinois at Urbana-Champaign, and University of Illinois at Springfield campuses, approved a resolution April 27 that endorses reforms that would improve the financial footing of the State Universities Retirement System (SURS).

THE DOCUMENT says any reforms being considered should maintain benefits promised to current participants.

“THE RESOLUTION embraces pension funding principles espoused by the Institute of Government and Public Affairs (IGPA) of the University of Illinois,” said Dr. Donald A. Chambers, Chair of the University Senates Conference and Professor of Biochemistry and Molecular Genetics at UIC. “The USC resolution is a sign that the highest group in the shared governance structure of the University of Illinois recognizes the need to address the SURS funding shortfall and for shared obligation.”

ON APRIL 30, the University of Illinois at Urbana-Champaign Senate unanimously expressed its support for the document.

THE FULL resolution and links to additional information are below.


Resolution on Pensions
University Senates Conference
April 27, 2012

THE UNIVERSITY Senates Conference (USC), in its role as a faculty elected advisory body to the President of the University and the Board of Trustees, recognizes that the funding basis for the State University Retirement System (SURS) is not sustainable in its current form. Previous underfunding of the system has made SURS unable to continue to pay out benefits indefinitely at current levels, even though participants have fully contributed their portion of responsibility for the system.

AS HAS been documented, Illinois ranks 50th among the 50 states in adequately funding its public pensions. This situation cannot be allowed to continue; retaining and recruiting top faculty to our universities will be increasingly difficult unless this issue is addressed.

TODAY WE face a reality in which sensible, equitable reforms are needed. The USC writes to acknowledge this reality and to seek a constructive way forward. Reforms will be needed in order to return the SURS system to a sound financial footing, and all stakeholders — participants, the universities, and the State — have a necessary role to play in such reforms. These reforms must be guided by certain agreed-upon principles, the most important of which is fairness to university employees who entered the system on the basis of certain understandings and commitments that need to be honored.

OTHER PRINCIPLES also seem to us reasonable and prudent as a solution is being worked out. Many of these principles are laid out and defended in the IGPA report authored by Jeffrey R. Brown and Robert F. Rich: Fiscal Sustainability and Retirement Security: A Reform Proposal for the Illinois State Universities Retirement Systems (SURS), Institute of Government & Public Affairs, University of Illinois, Urbana-Champaign, Chicago, Springfield, Feb. 9, 2012.
  • Any reformed SURS system must be financially sustainable for the State, the universities, and the participants, and it must respect existing constitutional protections of already-accrued benefits;
  • All promised benefits to current participants and annuitants should be maintained, as guaranteed by the State Constitution (Article 8, Section 5 General Provisions);
  • Existing unfunded liabilities must remain the State's responsibility, and the State must provide credible guarantees that future payments will be made on time (such as through a clause that state contributions to the system must have priority);
  • In addition, the State should continue to make its contributions to the system at a level at least equal to the level of what it would be paying to Social Security (6.2% of pay) along with its contributions to health care;
  • Any transfer of normal costs to universities must be nominal, and phased in gradually;
  • Any reform must include improvements to the current Tier II program for new employees, as suggested in the IGPA position paper referenced above (this could include a hybrid plan combining some elements of defined benefits and an employee self-managed plan), and this revised program should also be available to Tier I employees;
  • Any change in participant contributions must involve consultations with those affected. The USC is ready to participate in further discussions in order to seek a constructive resolution to these issues.
THE UIC Senate Executive Committee on May 2 passed the following resolution:
“The UIC Senate requests that the State of Illinois' Legislature engage the University of Illinois' faculty and staff in consultation regarding any proposed changes to the State University Retirement System (SURS). The Resolution on Pensions, passed unanimously by the University Senates Conference on April 27, 2012 and endorsed by the UIUC Senate, should serve as a starting point for meaningful discussion.”

“LEADERS OF our State's public universities have been engaged on their respective campuses and in Springfield for over a year to identify an equitable solution to the unsustainable pension funding shortfall,” said University of Illinois President-Designate Robert A. Easter and President Michael J. Hogan in a May 4 e-mail. The day before, the Presidents and Chancellors of the State's public universities acted in unison to provide a "Statement of Objectives" for  resolving this issue. They did so in a letter to Governor Pat Quinn and to the four leaders of the State House and Senate.

THE LETTER states that any changes affecting SURS must provide "a credible certainty of retirement security to our employees." It lays out principles and specific conditions essential for a successful pension stabilization proposal. "It must also be financially sustainable for the State, the universities, the participant, and it must respect existing constitutional protection against impairment of already-accrued pension benefits," the letter stated.

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