May 8, 2012
Illinois’ pension systems are the worst-funded of any state in the nation, with money set aside now for only 43 per cent of the pension benefits already earned. The national average of 80 percent is almost twice that.
As a member of the bipartisan, bicameral Pension Work Group, appointed by the Senate Republican caucus, working with Governor Pat Quinn’s officer to stabilize our state pension systems, I am pleased to report we are making progress. We are developing a comprehensive solution that will lead to significant pension savings while safeguarding the viability of the state’s public retirement systems for teachers and state employees.
Illinois’ total pension debt is $99 billion, which includes $83 billion in unfunded pension liabilities (owed for benefits already earned) and $16 billion in pension bonds still unpaid. We cannot sustain this imbalance.
Our best course to a solution is an increased employee contribution and an adjusted annual cost-of-living increase. We think retired employees should continue to have access to healthcare, but we acknowledge they must be prepared to pay a share of the cost for that access.
Labor groups suggested, and we have agreed, that the state should move to funding 100 per cent of its benefit costs over 30 years, and that the State guarantee its commitment to the funding plan. Employees have made their payments; it is the state that has in the past defaulted on its responsibility.
The Governor has used the ongoing discussions of our work group to frame his proposal, but I believe his plan to gradually increase the retirement age to 67 for current teachers and employees is counterproductive.
On May 3, the Illinois Policy Institute issued a report providing us with a lot of useful data and insight into pension reform. However, I respectfully disagree with their support for the Democrats’ proposed shift of pension normal cost to local school districts outside Chicago, to community colleges and to public universities.
I do not support the cost-shift because of the inherent property tax increase for homeowners and businesses to fund the new responsibility for local taxing bodies.
The Illinois Policy Institute fails to recognize that the key solution to our pension “calamity” is benefit reforms – not the cost-shift. The state must be responsible for paying off the $83 billion in unfunded liabilities that has accrued because past General Assemblies and past governors failed to meet their obligations.
It is important that the issue of cost-shifting does not delay or sidetrack the reforms, which can save the state as much as – if not more than – $100 billion by 2042.
Pension reform should be about protecting the state’s public retirement systems so they will have sufficient funds to meets their commitments and to pay the benefits promised to these workers under the Illinois constitution.
State Senator, 44th District