Statements and Updates

Statements & Updates

April 23, 2012
Pension Message from President Peters

Dear Colleagues,

Friday afternoon Governor Quinn outlined the framework of his plan to resolve the state’s pension funding crisis. Briefly, the Governor’s proposal provides for 100% funding for pension systems by 2042 by making the following changes to the current plan:

  • 3% increase in employee contributions
  • Reduce COLA (cost of living adjustment) to lesser of 3% or ½ of CPI, simple interest
  • Delay COLA to earlier of age 67 or 5 years after retirement
  • Increase retirement age to 67 (to be phased in over several years)
  • Establish 30-year closed ARC (actuarially required contribution) funding schedule
  • Public sector pensions limited to public sector employment

In return for the changes above, employee pay increases would continue to be counted in the calculation of their pension, and employees would receive a subsidy for their health care in retirement.

The Governor’s plan also calls for phasing-in the responsibility for paying normal costs of pensions to each employer, including school districts, community colleges and public universities.

So what does the Governor’s plan mean for our faculty and staff at NIU who have never missed a contribution to their pension plan?

While there is no doubt the state’s pension plans are in terrible financial shape, the root cause of this problem is NOT the fault of the state employees. Nor is it the fault of the taxpayers of the state of Illinois. The root cause lies in decades of state underfunding of required pension obligations while redirecting resources to other priorities. To resolve this funding crisis, shared sacrifice is necessary.

Read Message >


June 2, 2011
President's Pension, Budget and Legislative Recap

We closed the books on another semester two weeks ago, which in theory means that it was a time to catch our breath...but not so this year.

The last few weeks have proven to be exceedingly busy for NIU administration and staff. We have been  grappling with the decisions made or left unresolved by the Illinois General Assembly regarding future pension benefits for current employees, annuitant health care benefit changes, a reduction to our operating base budget for FY2012, procurement reform, and a new emphasis on performance-based funding and outcome measures.

I want to take this opportunity to bring you up-to-date on these critical issues.

 Read Statement >


May 16, 2011
Update on Pension

Based on actions taken Friday, May 13, it appears that the language in HB149 will be the current strategy that lawmakers are looking to in their effort to make changes on existing pension regulations. (For tracking purposes, the actual bill to follow will likely be SB 512, which will adopt language based on the general proposals contained in HB 149.)

This bill would impose significant changes in the way that pensions for state employees are managed and it requires very careful attention. The next few days and weeks are critical for this issue.

Read Statement >


March 24, 2011
President's Update on Pension and Budget Issues

NIU recently concluded testimony before the house and senate appropriations committees in Springfield. It is difficult to predict the precise course of this spring’s budget debate. However, based upon feedback received at those hearings, it appears that in Fiscal Year 2012 we will again be asked to do more with less.  How much less, it is still too early to predict.

Read Statement >

Watch Video >


March 9 & 10, 2011
President's
Testimony before House and Senate Appropriations Committees 

Higher Education is in an era of tremendous change and uncertainty.  In terms of student success and fiscal sustainability, the public university model of the 20th century no longer fits.

Nationally, fewer than half of the students who enter college today finish with a degree or credential. Those who do finish take longer, pay more and are saddled with too much debt.

What’s more, in Illinois, the financial model that supported our public universities for generations has eroded dramatically.

Read Statement >

View Powerpoint slides > (PDF)


February 16, 2011
President's
State Budget Proposal Statement

Today Illinois Gov. Pat Quinn outlined his state budget proposal for next fiscal year, signaling his spending priorities for Fiscal Year 2012.

His speech focused mostly on reduced funding levels and emphasized the importance of restructuring the state’s backlog of unpaid bills by borrowing approximately $8.75 billion to pay off most of the outstanding debt owed to hundreds of service providers throughout the state, including NIU.

Read Statement >


February 7, 2011
President's
Pension and Budget Statement 

No Illinois meteorologist can go wrong predicting snow and cold in winter. Sadly, the state’s budget woes have become almost as predictable, and 2011 appears to be no exception.

The cash flow from the State of Illinois to NIU to meet our Fiscal Year 2011 operating budget is a trickle. The MAP grant funding that so many of our students rely on to fund their college educations remains uncertain. The pension plans upon which university and state employees depend for their retirement years are once again under attack. In addition, last month, promised funding for infrastructure improvements was called into question in a stunning Appellate Court decision.

Read Statement >

<h2>Update on Pension</h2>
<h3>May 16, 2011</h3>
<p>Based on actions taken Friday, May 13,
it appears that the language in <a href="http://www.ilga.gov/legislation/BillStatus.asp?DocNum=149&amp;GAID=11&amp;DocTypeID=HB&amp;SessionID=84&amp;GA=97" target="_blank"><b>HB149</b></a> will be the current strategy that lawmakers are
looking to in their effort to make changes on existing pension regulations. </p>
<p>(For tracking purposes, the actual bill
to follow will likely be SB 512, which will adopt the language of HB149.)</p>
<p>This bill would impose significant
changes in the way that pensions for state employees are managed and it
requires very careful attention. The next few days and weeks are critical for
this issue.</p>
<p>The information below provides a very
simple synopsis of proposals that have been reported from Springfield, and a best estimate of the
impact of the current proposals. Since the bill is still being debated, and the
topic is highly complex, this may not be the formal shape of the bill, and
final language as not been released. </p>
<p>According to a briefing prepared by the
State University Annuitants Association, HB 149<b> </b>would
require current employees to choose among three retirement plans.</p>
<p><b>Tier I:</b> Stay in your
current plan, but contribute more to it:</p>
<p style="padding-left: 30px;">Employee contribution rate increases from 8% to a yet-to-be determined
amount in the range of 14-16%.  The rate
would be subject to periodic revision and increases, possibly every 5 years.</p>
<p><b>Tier II:</b> Participate
in the second-tier plan that passed last year, which implemented reduced
benefits for those hired on or after January 1, 2011:</p>
<p style="padding-left: 30px;">Employee contribution rate would decrease  from 8% to as low as 6.5% (simply because of
the lower value of this plan). </p>
<p><b>Tier III:</b> Participate
in the 401(k)-style Defined Contribution Plan in which the State would match
employees’ contributions.</p>
<p style="padding-left: 30px;">The defined contribution option would remain unchanged for current
participants in the Self-Managed Plan 
(7.5% employee contribution with a state match).  This would most
likely be the default if no election were made to stay in Tier I.   A different defined contribution option would
be made available for new employees.</p>
<p>The plan as currently presented would have <b>no impact on pension benefits that employees have already accrued under
the SURS to date. </b>Any pension savings accrued up and until the legislation
took effect would be paid as promised.</p>
<p><strong>Hearings on the bill are scheduled as follows:</strong></p>
<p>
Personnel and Pensions Committee Hearing 2 p.m., May 18, 2011, Capitol Building Room 122B
Springfield,
  IL </p>
<p>Personnel and Pensions Committee Hearing noon, May 19 2011, Capitol Building Room 122B Springfield, IL </p>
<p><strong>For more information:</strong></p>
<p>A preliminary analysis of the bill by the Institute of Government Public
  Affairs is available <b><a href="/statements/Unintended-Consequences-HB0149_1_1.pdf" target="_blank">here</a> </b>(PDF). As this analysis makes clear, this
is an extremely complex bill, and many details have yet to be worked out.</p>
<p>Additional information may be available from the State
Universities Annuitants Association at: <a href="http://www.suaa.org/">www.suaa.org</a> or at the SURS
website at: <a href="http://www.surs.org/">www.surs.org</a>.  </p>