June 5, 2012

Members of the University of Illinois community,

The Illinois General Assembly concluded its annual spring legislative session last week, but lawmakers left some unfinished business that is critical to the state and our University employees.

The legislature could not reach agreement on a funding stabilization plan for the state's public pension systems. It is uncertain whether Gov. Pat Quinn will convene a special summer session in Springfield to address the pension issue, or if legislators and the governor will wait until after the November election.

Either way, the University of Illinois stands ready to continue to participate in the dialogue, providing important information and perspective to legislators, and advocating on behalf of the University, its employees and retirees for a solution that maintains core employee benefits and payment of unfunded liabilities by the state. We value stability in the pension system because of the impact it has on the lives of our people and on the fiscal viability of the state.

Illinois' fiscal condition factored into other legislative outcomes that are important to the University:

Fiscal year 2013 budget appropriation. The General Assembly passed and sent to Gov. Quinn's desk a higher education operating appropriation that is 6.17 percent less than the current fiscal 2012 appropriation. This represents a $42.5 million reduction in the University of Illinois appropriation to $646.6 million. A reduction in the University's appropriation of general revenue funds was anticipated and budget scenarios to deal with it are being developed across the campuses.

Medicaid. The legislature enacted major Medicaid reforms that included a $1.6 billion budget cut for the program; an increase in tobacco taxes to help fund health care; and new requirements for charity care provided by hospitals in Illinois. Although the University's Hospital & Healthcare System's patients and clinical operations were not spared from the budget cuts, many of our key programmatic strengths were unaffected.

Health Care Insurance for Retirees. In an effort to address the cost of providing health care for state retirees, the General Assembly passed, and Gov. Quinn said he will sign, legislation (SB1313) that modifies premium payments for retiree health care insurance by allowing the director of the state Department of Central Management Services (CMS) to set the premiums. Premiums will be based on income and length of service. The effective date would be July 1, 2012. An annual rate-setting process will occur, providing universities, employees and retirees an opportunity to express their views.

Re-employment of retirees. The University worked closely with legislative sponsors on a bill that limits public universities in re-employment of their retirees (HB4996). It was passed in the House and Senate, and Gov. Quinn is expected to sign it into law. Effective in the 2014 academic year, it sets financial conditions on the University for retirees who are employed for more than 18 weeks in an academic year and earn more than 40 percent of their previous salary. However, it would exempt from these rules those whose salaries are funded by grants or gifts. Human resource policies and procedures are being reviewed to determine what changes should be made to comply with the new law.

For additional information about these and other legislative initiatives you can go to the General Assembly website, www.ilga.gov. The University will provide updates as events may warrant.

Sincerely,
Michael J. Hogan, President
Robert A. Easter, President Designate