Tom Kacich: '05 pension 'holiday' made things worse

Tom Kacich: '05 pension 'holiday' made things worse

It says something about the sad state of Illinois government that the only competing pension reform proposals that got serious consideration from the Legislature this spring came from two lawmakers who eight years ago voted to skip two years' worth of pension payments.

That $2.3 billion "pension holiday" may not have been the main cause of the gruesome condition of the state's pension systems, but it sure made things worse.

At that time, the state's pension systems had compiled about $38.6 billion in debt. Now that figure, eight years later, is around $100 billion. And because lawmakers did nothing to solve the problem, particularly in a dreadful last week of legislative gridlock, the number continues to grow.

If Republicans can't make political hay out of this situation, they'll never be able to do it. That's because it was the Democrats alone — including House Speaker Michael Madigan and now-Senate President John Cullerton — who voted for and even pushed those "pension skips" in May 2005.

State Rep. Naomi Jakobsson, D-Urbana, voted to skip the pension payments. She defended the vote at the time, saying it helped avoid "disastrous" cuts to education, health care and social services.

But Republican legislators, including many from East Central Illinois, were right on target in opposing the pension holiday.

"You are playing with fire," said now-retired Rep. Bill Black of Danville. "You are playing with potential bankruptcy of the pension system. We are mortgaging all of our tomorrows for the expediency of adjournment by May 31."

Black not only was prescient; history repeated itself this year. Democrats, who have enormous majorities in both the Senate and the House, adjourned on May 31 without fixing the pension mess because they couldn't decide between two Democratic-backed plans.

Black wasn't alone in predicting future problems.

"For every dollar we get from the systems today," said then-state Rep. Chapin Rose, R-Mahomet, "the cost is 11 dollars to get it back. It's like Wimpy from Popeye. 'I'll gladly pay you Tuesday for a hamburger today.'"

Rose recalled the pension debate and vote on Tuesday, calling it "probably the worst single vote in the last 25 years." He estimated it is responsible for 33 percent to 40 percent of the state's pension mess.

Maybe. There have been many pension system underpayments and pensions sweeteners over the last 70 years by Republican and Democratic governors, and Democratic and Republican legislators. There even were university presidents who didn't object to slighting the pensions in exchange for a faculty and staff pay raise.

But it's hard to find another example of such a single rotten idea that had such a broad rotten impact.

"This is a little like the state using a credit card, charging a little more and a little more, but only making the minimum payment," Sen. Dale Righter, R-Mattoon, said at the time. "While we're doing it, the debt keeps getting larger and larger."

Sounds familiar, doesn't it?

But then-Senate President Emil Jones called it "the right thing to do," and he and Madigan worked with the-Gov. (and now federal inmate) Rod Blagojevich to skip the pension payment so that other general revenue spending — and some side deals for pork barrel spending — would get done.

So it's more than odd that the only pension fixes considered this spring came from Madigan and Cullerton, and that they still can't fix the problem even though they have huge majorities.

What a sad state. In more ways than one.

Tom Kacich is a News-Gazette editor and columnist. His column appears on Wednesdays and Sundays. He can be reached at 351-5221 or at

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jms wrote on June 05, 2013 at 7:06 am

I'm a democrat, and I have not voted for Naomi since she voted not to fund the pensions. She also is a very unresponsive representative.

samret wrote on June 05, 2013 at 7:06 am

Sad indeed.  Although it is true that the only pension fund "fixes" considered came from Cullerton and Madigan et al., there were other suggestions, notably those from the University group and Ralph Martire.  It is my belief that the principal reason those (and possibly other) suggestions did not receive any consideration by our legislature was  their insatiable appetite to demonize the retirees and make their benefits the root cause of the problems with the pension fund. They could then successfully garner public opinion for draconian cuts in retiree benefits (never mind the fact that those benefits were earned and protected contractually and by the State Constitution) all the while cloaking their culpability in the pension fund debacle.  As long as our legislators continue to insist that the solution to the pension fund lies in the fleecing of the retirees, real solutions to the problem will continue to"evade" them.

nick wrote on June 05, 2013 at 8:06 am

The comment by samret is true. The effort to demonize public workers has been a successful campaign. It has been created as a distraction and has been very effective.

billbtri5 wrote on June 05, 2013 at 8:06 am

hey, the pension "holiday" worked so well they are or have already done it with the Chicago Teacher's Pension...and if you have any questions as to how much of a difference doing that in favor of more spending ultimately made,  i'm sure our state rep can point that out to you...

samret wrote on June 05, 2013 at 9:06 am

Fortunately, they were NOT able to pull off that "pension holiday." For now, the Chicago Teacher's Pension Fund is safe.

Fedupwithstatereps wrote on June 05, 2013 at 9:06 am

Madigan needs to go!  In fact, the entire House needs to be fired and special elections held to replace them all!  Horrible, shameful leadership!!! 

pattsi wrote on June 05, 2013 at 9:06 am

Can someone shed some light as to why the IMRF is fully funded as compared to these 4 state pension funds that are being used in business schools across thecounty as prime examples of "bad practice.\"?

serf wrote on June 05, 2013 at 2:06 pm

Samret has it basically correct below.  IMRF is fully funded partially because for decades IMRF has had the ability to intercept funds from municipalities if they refuse to pay their share.  

As an example, if the actuaries determine that the City of Champaign owes IMRF $2 million for their share of the annual contribution (I'm totally pulling these numbers out of my hind-end, btw), then Champaign has to pay that much.  If Champaign tries to short IMRF, IMRF can basically intercept tax money through the state before it gets disbursed back to Champaign.  That's a very basic example, but essentially it works like that.  IMRF is not a state run agency, but it covers municipal and county employees throughout the state, if that makes sense.  Municipal police and fire departments typically all run their own pension funds if the municipality is over 5,000 in population.  

The state pension funds do not have the power to intercept funds from the state of Illinois.  If the legislature decides not to pay the annual pension contribution, well, we see what happens....

vcponsardin wrote on June 05, 2013 at 11:06 am

But let's not forget that if the Republicans were in control of the state, they'd have a very quick and easy solution:  They'd dump the entire pension system altogether and then tell all the state employees, "Tough.  You should have known thirty years ago that this would happen and instead you should have saved for your retirement in a 401(k).  Now all that money you put into the state pension system is ours.  But let's be clear, it's not a 'tax,' it's a permanent penalty we're imposing on you for daring to work for the state and for being liberals."

nick wrote on June 05, 2013 at 12:06 pm

Many of us requested a 401(k) option. It was not allowed. The pension system,through the state, was the only option.When I started years ago the old veterans warned us of the mismanagement of the state pension systems.The damage that was done to the State Police system was used as an example. In spite of dedicated public workers who have been very active in giving warnings and proposing solutions for the last 30 years the same theft and mismanagement has taken place.This time it is far worse and there will not be a solution.The fabulously wealthy brokers,bankers,developers and their political agents that money and power placed in the legislature have collected enormous wealth from this thirty year corrupt scheme. We did know thirty years ago that this was coming. We tried to fight against it. We lost.

bluegrass wrote on June 07, 2013 at 9:06 am

Ah yes.  Are you ready to take trolley to the Neighborhood of Make Believe, where King Friday and the republicans magically take over the veto-proof democrat majority in the house & senate, and governor's office?  A land where those evil republicans dump the entire pension system in a hypothetical, made up neverland?  Come on kids, lets take a trip and visit Henrietta, the Owl, and Queen Saturday.  I can hear the dinging of the bell now.  All Abooooard!

Sid Saltfork wrote on June 07, 2013 at 11:06 am

Ah, yes; bluegrass... slip words of glee into others worry.  What was your comment's point? 

readone wrote on June 05, 2013 at 11:06 am

I worked for the state and when hired I asked not to be put in the pension plan.  I asked for a 401k option and at that time, was told it was not an option.  I also asked to be put into federal Social Security, again I was told no.  I did not trust the state to handle my pension but the only other option was not to accept a job with the state.  So I guess that is my fault and I should spend the rest of my life with no money, homeless and destitute.  Even though 8% of my salary was taken my entire career so that would not happen.  I did not vote for a pension holiday, did not even want to participate in the pension plan, but now that I am nearing retirement age ny future is un their hands.

samret wrote on June 05, 2013 at 12:06 pm

From my understanding (correct me if I am mistaken), IMRF is NOT under State control.  Local governments participating in that fund are contractually obligated to make the requisite pension contribution...there isn't an option to take a ”pension holiday.”. The other retirement systems are under State control.  While in and of themselves, the organizations do a great job for their constituency, they are at the mercy of the State legislature when it comes to receiving the necessary funds for the pension obligations.  The State has been derelict in their fiscal responsibility to these retirement systems thus causing the current pension crisis.  The legislators would have you believe that the problem is solely due to greedy retirees collecting excessive benefits.  Currently, there is NO mechanism to compel the legislature to fully fund the retirement systems...they would rather take the shortfall from the retirees who already made the requisite contribution to the respective retirement system.  I hope that was accurate and useful.

Johnhotto wrote on June 05, 2013 at 12:06 pm

Thanks, Tom Kacich for reminding us of the history of the pension debacle and of our own Naomi Jacobbson's contribution to it.  I called her office at the time and begged her not to vote to skip the pension payment that year.  It was obvious to anyone with half a grain of sense that it would set a precedent that would destroy the pension system.  What was even worse, is that she (at least claimed at the time) that she got nothing in return for her vote!!!  What kind of politican is that?  If you're going to screw your own constituents, many of whom are state employees and retirees, you should at least exact a high price for it.  My blood pressure still goes out of control when I think of what she did.

Bulldogmojo wrote on June 05, 2013 at 1:06 pm

"My buddies wanted to be firemen, farmers, or policemen, something like that. Not me, I just wanted to steal people's money" ~John Dillinger

thelowedown wrote on June 05, 2013 at 2:06 pm

"But it's hard to find another example of such a single rotten idea that had such a broad rotten impact."

Racial discrimination? Gender discrimination? Sexual discrimination? 


"So it's more than odd that the only pension fixes considered this spring came from Madigan and Cullerton, and that they still can't fix the problem even though they have huge majorities."

Maybe head over to the library Tom and rent some books on the politics of organizations. It is not suprising in the least.

squad33 wrote on June 05, 2013 at 8:06 pm

I recall a statment by Naomi Jakobsson at the time.  I don't remember the exact wording but it went something like this: 

     I don't see why people are so upset about this.  The state constitution says the money will be there, so there is nothing to worry about.

She apparently didn't realize that for the money to be there, the state has to put it there.

Speakerman11 wrote on June 05, 2013 at 9:06 pm

I hope all remember this at the polls next year when they look down and see a bubble next to the offspring of one of the most corrupt politicians in the country. Ms. Madigan may be in a position to continue to send the Illinois economy to the sewage plant. Please don't forget this.

Sid Saltfork wrote on June 11, 2013 at 12:06 am

Quinn's special legislative session on "pension reform" is scheduled in the near future.  Quinn is kissing Madigan's boot by pushing Madigan's "pension reform" bill even though Madigan did not allow the senate bill to be voted on by the house of representatives.  Madigan expects all of his minions to vote "yes" on his bills.  If a compromise bill needs to be voted on, will Naomi call in sick again?  The area's state senators have stood up for their constituents.  Will the area's state representatives stand up to Madigan?  It will be remembered at the polls the next election.  It will be remembered at the Fourth of July Parade also.

samret wrote on June 11, 2013 at 8:06 pm

Someone please explain to me why, when it is widely acknowledged that the pensioners had no role in creating the pension fund problem, the cure for the problem is to take money from the pensioners! Both SB 1 and SB 2404 do that, one less than the other.  Why is no other proposal, such as the Ralph Martire proposal, acceptable?  It almost feels like this "pension problem" was created over decades to be used as a means to ending the pension system.