The state Senate passed the measure 30-24, and the House passed it 62-53, the Chicago Tribune reports, with both votes coming in within minutes of each other.
The deal will save $160 billion over 30 years, and reduce the state's payments for pensions by about $1.5 billion a year, reports the Chicago Sun-Times.
It does so by among other things creating a payment plan that is projected to erase the shortfall by 2044, reducing employee contributions to their pensions by 1 percent, raising retirement ages of those under 43, limiting the cost of living increases to pensions and banning employees from using sick or vacation time toward years of service.
For those reasons, labor unions may mount a legal challenge to the legislation.
Illinois' pension crisis is considered the worst in the nation, due in large part to years of lawmakers diverting money elsewhere and not making full payments into the funds.
-Pam DeFiglio, contributing
How local representatives voted:
- Rep. Fran Hurley (D-Chicago) - Yes
- Rep. Kelly Burke (D-Evergreen Park) - Yes
- Rep. Monique Davis (D-Chicago) - Yes
- Sen. Bill Cunningham (D-Chicago) - Yes
- Sen. Emil Jones, III (D-Chicago) - Yes
Click here for the Senate roll call.