CHICAGO – Illinois lawmakers convene a special session on pension reform Wednesday but the only action expected is the formation of a special conference committee charged with the task of fashioning a reform package that can pass muster.

Democratic leaders agreed to the conference committee proposal first floated by Gov. Pat Quinn after it became clear in recent days that a political stalemate over two rival plans could not be resolved ahead of the special session called by Quinn.

Lawmakers would be expected to return for another special session next month to consider the new plan.

The General Assembly’s failure late last month to overhaul the pension system, weighed down with $95 billion of unfunded liabilities for a funded ratio of just 40%, drove downgrades by Fitch Ratings and Standard & Poor’s earlier this month. 

The Senate and House are deadlocked over plans sponsored by their leaders -- Senate President John Cullerton, D-Chicago, and House Speaker Michael Madigan, D-Chicago.

The conference committee is designed to “bridge the differences and forge agreement on a comprehensive pension reform plan,” the governor’s office said in a statement. The conference committee would include 10 members, six Democrats and four Republicans, reflecting the legislature’s composition.

The House pension package saves more by imposing direct benefit cuts and raising employee contributions. The Senate package asks employees to accept cuts in exchange for preserving their retiree healthcare subsidies. It saves only half of what the House plan does but supporters believe it could better withstand a legal challenge, and charge that the House version cuts too deeply into promised benefits.

“While it is true that Cullerton has a preferred framework for reform, he thinks everything should be on the table for the conference committee. It’s time to lean toward resolution,” said his spokeswoman Rikeesha Phelon.

Details of the conference committee – a rarity in Illinois – were to be hashed out Wednesday. 

The ongoing stalemate comes as the state prepares to sell $1.3 billion of general obligation bonds next week. State debt manager John Sinsheimer said recently the state has no intention of pulling the sale from the market even if investors demand steeper interest penalties due to the state’s fiscal struggles and pension inaction. Penalties in secondary market trading have widened over the last week.

“There are critical capital projects and they need funding. It’s too important to the future competitive stature and livability of the state,” Sinsheimer said earlier this month after the downgrades.

Fitch lowered the state one notch to A-minus and assigned a negative outlook. Moody’s downgraded the rating on $27 billion of GOs one level to A3 and also assigned a negative outlook.

The state and its finance team are holding investor meetings ahead of the sale. Siebert Brandford Shank & Co. LLC, Stifel Nicolaus & Co. Inc., and Wells Fargo Securities are co-bookrunners. Peralta Garcia Solutions is financial advisor.

Standard & Poor’s rates Illinois A-minus with a negative outlook after its downgrade in January, which reflected analysts’ dim view that an overhaul would be achieved during the spring session.

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