System draws criticism

By Andy McMurray

State university employees in Illinois can expect changes in the State University Retirement System under a new law passed in May.

The retirement system for state university faculty is operated by SURS, participants do not pay into and are ineligible for Social Security benefits. This is one reason why some see changes and cuts in pensions as alarming.

Those close to the issue locally criticized the legislation.

Robert Pritchard (R-Hinckley), 70th District State Representative, said the legislation represented a disastrous raid on the state pension system in a June 26 press release.

Illinois’ financial woes played a role in changes to the SURS.

The state is basically borrowing $3.5 billion to make up for a budget deficit, Pritchard said.

A June 2 memo from NIU President John Peters to faculty outlined some of the biggest changes included in the law.

They included cost of living adjustments, which increase at a rate of 3 percent. Changes in this category will be postponed until an advisory commission can issue recommendations in November, Peters stated.

Two other major changes lie in interest rate calculations and the now-defunct money purchase option.

Interest rates used to be calculated annually by officials at SURS. The new law shifted that responsibility to the Illinois Comptroller’s Office.

The money purchase option often allowed employees to receive increased retirement benefits through a series of formulas which took into account factors such as age, said James Hacking, SURS executive director.

With the passage of the new bill, the money purchase option was eliminated for employees hired after July 1 of this year.

“It’s been a beneficial option for a large number of employees,” said Steve Cunningham, associate vice president of human resources, “and it won’t be available for new employees.”

The money purchase option/formula was popular, as 60 percent of employees took advantage of it, Cunningham said.

Lawmakers are already proposing changes to the new pension rules and Pritchard pointed out a number of alternatives to alleviate the state budget problems.

Medicaid reform, job creation and governmental reform are among some of the viable options to fix the state budget, he said.

Forty percent of the state budget is used in Medicaid payments, and this cost will continue to increase in the future, Pritchard said.