Another pension plan on table

Tired of waiting for the big boys to act, a group of rank-and-file legislators has proposed a pension reform plan.

Twenty-one members of the Illinois House stepped forward last week with a plan aimed at spurring action on the state's financially poisonous public pension problem.

At first blush, the proposal is problem-ridden. Its constitutionality is unclear, its costs savings are undetermined and its prospects of passage are unknowable — but probably not good.

Still, leaders in both parties seem to agree that it's a start, and that's an improvement over the situation that existed before the plan was raised.

If that's damning this proposal with faint praise, so be it. Legislators have shamefully but steadfastly refused to act on this problem for years now, allowing it to grow worse by the day.

For those who are counting, the unfunded liability of the state's five public employee pension plans is up to roughly $96 billion. Earlier this year, it was roughly $85 billion. When former Gov. Rod Blagojevich held office, it was $35 billion. That seems like chump change now.

Yet our legislators have fiddled while Illinois burned. They simply have been unable to summon the courage to seriously discuss, let alone pass, the tough changes needed to put the pension systems back on a solid financial footing. They consistently put their personal political interests first and tried to ignore the issue because they fear the political repercussions from public employee unions and current and retired state employees.

The group of 21 is led by Northbrook Democratic state Rep. Elaine Nekritz, one of House Speaker Michael Madigan's point persons on pensions. Officially, Madigan is not backing the plan, but Nekritz confirmed she discussed it with him. So he's clearly not opposed and considers it a starting point for negotiations. Senate leader Christine Radogno and House leader Tom Cross, both Republicans, welcome the plan as a framework for discussions. Only Democratic Senate President John Cullerton, raising legal concerns, seemed unimpressed.

Among the suggested changes in the plan are:

— Reductions in the annual 3 percent cost-of-living increases pensioners receive.

— A gradual shift of pension payment responsibilities for teachers from the state to local school boards.

— A slight increase in the retirement age.

— Increased employee retirement contributions of 2 percent.

These proposals are variations of what already has been discussed, and public employee unions, not surprisingly, were aghast. They complained that they had not been consulted and said the proposal has "significant problems ... that need to be worked through."

They have a point. But public employee unions have been consulted by Gov. Quinn, and nothing good so far has come of it.

Although you can't tell it from members of the General Assembly, doing nothing is not an option. The costs of funding public pensions, as has been repeated ad nauseam, is destroying the state's ability to fund core programs like education, law enforcement and transportation.

Further, the state's public pension systems will collapse if changes are not made. There's no question that past irresponsible governors and legislators ignored their legal duty to properly fund the pension systems. But the question of responsibility is irrelevant. The problem must be addressed.

That's one reason why it's disappointing that no area legislators have stepped forth to lead on this issue. Area legislators have thousands of constituents who will be affected by this issue, but they have been mostly silent.

Where do state Reps. Chapin Rose and Jason Barickman, both Republicans, and Democratic state Rep. Naomi Jakobsson and Democratic state Sen. Mike Frerichs stand on the specifics of pension reform? They were elected to lead.

Political observers have suggested for months that the best time to pass a pension bill is in early January, just before the new General Assembly takes office. The idea is that lame-duck legislators will provide the necessary votes because they are immune to voter accountability. It's a disgusting way to do business but, nonetheless, common practice in Illinois.

There are, however, no guarantees legislators will act. The only guarantee is that this terrible problem will continue to grow worse if they don't.

Sections (2):Editorials, Opinion
Categories (2):Editorials, Opinions

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Sid Saltfork wrote on December 09, 2012 at 10:12 am

The NG editorial states the responsibility of the skipped funding the pension systems is irrelevant.  Now that the debt is large, the fact that the employer did not fund the employer contribution to the pension systems while the employees did is "irrelevant"?

The NG editiorial leaves out other information on the proposed pension reform.  SB1313 was passed last May requiring public service retirees pay a portion of their earned health insurance benefits.  Previous to the bill passed, employees who worked more than 20 years were provided with full healthcare benefits in retirement.  People retired on that benefit.  Now, it makes no difference whether the employee worked 20 years, or 45 years prior to retirement.  The employee is to come up with the money for healthcare insurance even those on Medicare.  The state agency Central Management Services was to have developed a plan regarding how much each employee was to pay based on the legislature's decisions.  That has still not happened.  Retirees have no idea what is going to be taken out of their pensions.  Additionally; the proposed plan would limit any inflationary increase in pensions for 5 years, or until the employee reaches the age of 67.  Employees in the private sector, and the public sector retire based on plans.  Public service employees know that there pensions are protected by the State of Illinois Constitution which states that benefits cannot be diminished, or impaired.  Yet, this proposed plan with SB1313 does just that.  Contract law is violated also.  

Other states have tried to absolve benefits from their retirees.  All have failed in the courts. This proposed pension reform will end up in the courts also.  During the time it takes for it to be decided; the majority of public service employees will be in limbo, and slide into poverty.  It will be found that the state has to back pay the retirees; but the state will indicate that it will have to do so gradually.  It will be just like the court decision this week regarding the state having to honor, and pay the current employees their 2% raises that were signed into contract with the employer, and reneged on by the employer.

Why not do the legally correct pension reform now?  Make changes on the current employees while honoring the benefits previously earned by them.  Pay the employer required contribution annually.  The current "guarantee" in the proposed pension reform plan is useless.  It was guaranteed before, and before....  Honor the State of Illinois Constitution, and don't steal from the retirees.

Of course, this will not be done.  The payment of the existing debt would require controlled spending on only necessities in state government.  It would mean that pork barrel spending for campaign donations (bribes), and votes would discontinue.  One of the signs that it will not be done is the exemption of the Illinois Judges Pension System from the "pension reform".

The NG will support the "pension reform" in forthcoming articles.  Hopefully, a more balanced reporting will occur.