UPDATED: Madigan Drops Plan to Shift Pension Costs to School Districts

Illinois House Speaker Michael Madigan (D-Chicago) on Wednesday dropped his controversial proposal to shift the costs of teacher pensions from the state to local school districts, universities and community colleges.

The announcement came after two days of spirited debate over pension reform in both the House and Senate.

"Assuming this is true, that he has given up for now, that is great news for our kids," Elmhurst Unit District 205 School Board President Jim Collins said on Thursday. "Every 1 percent they shift to us means a half-million dollars a year out of our budget. That directly affects the number of teachers we can employ ... and the instruction our children receive."

Madigan's plan, which was part of Senate Bill 1673, was widely criticized by Republicans, and threatened to derail other legislation to address the state's massive pension shortfall.

Madigan said he reached the decision after Gov. Pat Quinn asked him to drop the amendment, the Associated Press reports.

“He agrees with the Republicans. He thinks that we ought to remove the issue of the shift of normal cost out of the bill,” Madigan told the House on Wednesday night. “I disagree with the governor, but he is the governor. This is his request.”

Quinn's request was a shift from his previous position. Jerry Stermer, the governor's budget director, told Illinois Statehouse News that "forcing school districts and colleges to pay employees' retirement benefits is the responsible thing to do" since school boards negotiate teachers' pay.

Stermer added that the governor would support anything that could fix the state's unfunded pension liability.

The bill was handed over to House Republican Leader Tom Cross of Oswego, who slammed Madigan on Tuesday, calling his proposal a "poison pill" to kill pension legislation.

Plans to remove Madigan's amendment were considered by a House Panel on Thursday. The committee voted in favor of Cross's amendments, which remove the cost-shift from the bill. It now goes to the House floor.

Illinois currently has an $83 billion unfunded pension liability—$44 billion of which is from the Teachers' Retirement System.

"The state created the pension mess, the state should take responsibility for that and not shift that responsibility to our local property tax payers," Collins said.

With the cost-shift language off the table, lawmakers could vote on a comprehensive pension reform plan before the legislative session ends Thursday night.