House Bill 3898, House Amendment 1 Oppose

Rep. Deborah Conroy (D-Villa Park)

HB 3898, HA 1 is Unfair
The 13th payment (also called the 13th check) is a form of deferred compensation enacted in 1992 and negotiated by employee and employer groups to help offset inflation for Illinois Municipal Retirement Fund (IMRF) members. It is not a windfall or bonus, but the only cost-of-living protection against inflation for hundreds of thousands of workers and retirees in the IMRF, such as bus drivers, janitors, and cafeteria workers. Unlike other public retirement systems in Illinois, IMRF retirees do not receive compounded cost-of-living adjustments (COLAs). Rather, IMRF retirees receive a simple-interest COLA that does not protect them from inflation. This is why the 13th payment is necessary as a shield against inflation not found in other systems.

HB 3898, HA 1 is Unconstitutional
The Illinois Constitution protects the benefits of current and retired IMRF members including the 13th payment. HB 3898, HA 1 is a blatantly unconstitutional attack on workers retirement security.

IMRF Pensions Are Modest

Annual IMRF annuities average only $15,700. In 2012, 63% of all IMRF annuitants received a monthly pension of less than $1,000. The average monthly IMRF annuity for workers retiring in 2012 was $1,391. In 2013, the average 13th payment to an IMRF annuitant was $343. 67% of IMRF retirees are female, and 62% of these retirees receive a monthly pension amount of less than $750.

IMRF Is Healthy, and Its Members Provide Economic Benefit to Illinois

The IMRF is the best funded pension system in Illinois, with a funded ratio of 96%. It is not in danger of insolvency or facing a funding crisis. Currently, each IMRF employer contributes 0.62% of its annual IMRF payroll as a special assessment to support the 13th payment. This is not bankrupting local governments. Rather, the 13th payment is a vital component to the economic security of workers who dedicate their lives to serving Illinois. Furthermore, IMRF funding is levied separately from other property taxes. As a result, these assets cannot be transferred from one pocket to another to fund other services. In 2012, over 90,000 annuitants and 12,000 surviving spouses received IMRF benefits. Nearly 85% of IMRF retirees choose to stay in Illinois, which means their pension money goes to the local economy. A study conducted in 2012 showed that IMRF benefit payments generated $1.7 billion in economic activity statewide and helped to support 12,344 jobs.

Protect IMRF Retirees from Inflation and Protect the 13th Payment Oppose HB 3898, HA 1