Reps. Ives And Morrison promote true pension reform
June 24, 2013
It was in March of this year when a prediction was made that Illinois would probably exceed $100 billion in pension debt sometime in the month, which amounts to a huge and reckless shortfall in money owed to current and future retired teachers, judges, state workers, and even lawmakers themselves. To put in perspective: $100 billion in stacks of $100 dollar bill would weigh 10 tons, enough to buy Boeing Co. and Kraft Foods Group Inc., with a few billion left over.
Although a warning was issued in 2011 of a potential collapse of the state pension system, already the most underfunded in the nation, Democratic lawmakers and Governor Quinn continued to kick the can down the road failing to muster the political willpower to make meaningful changes. At $100 billion Illinois pension debts stand at about twice annual state expenditures, including capital spending, with pension liabilities growing by $17.1 million per day.
House Speaker Madigan, Senate President Cullerton and Gov. Quinn are presently in a battle of wits to pass pension reform that would, at best, cut the state’s $100 billion unfunded liability by $21 billion. Such a cut would take Illinois back to its 2011 level of unfunded pension liabilities, which then amounted to $42,000 in “combined” debt for every family in Illinois. At the *current level of unfunded debt liability, the debt for each family residing in IL has risen from $42,000 to $45,000:
*The amount of pension debt varies from report to report. Most often quoted is the $100 billion figure, while another source reported $97 billion, three billion short of $100 billion, because bonds performed better than anticipated. On Sunday’s Champion News radio program on WIND-AM (6/23), mentioned was that Moody’s puts Illinois’s pension debt at $230 billion.”
Whether during the past four months or the past ten years, Democrats have talked about pension reform — describing the pension crisis as a priority — while at the same time being unwilling to admit that they had a hand in creating it. It is therefore not surprising that a June 12th press conference amounted to a sounding board for House Speaker Madigan and Senate Speaker Cullerton, during which time each were able to opine on their efforts and the “merits” of their own plans, yet neither of their proposals offer true reform or would solve the pension crisis.
House Speaker Madigan has pushed through the IL House a proposal that would require workers to kick in more from their paychecks, scale back cost-of-living increases on retirement checks and raise the retirement ago.
Senate Speaker Cullerton, calling Madigan’s plan unconstitutional while contending that his bill would be upheld, pushed through the Senate a proposal that gives workers a choice, such as giving up health care to keep full pension benefits, to meet a constitutional challenge that pension benefits cannot be diminished or impaired once established.
Referring to the proposals offered by Madigan and Cullerton, House Republican Minority Leader Tom Cross claimed that Democrat Leaders were intentionally delaying pension reform for political gain.
Taken at face value, such a ploy seems cruel and indifferent to the needs of the people of Illinois, yet there exists a paradox because voters keep electing the same type of self-serving disreputable individuals to leadership time and again.
Unable to overcome a stalemate, Governor Pat Quinn called lawmakers back to Springfield on Wednesday, June 19, for an initial special session to deal with the pension crisis, which turned out to be a nonproductive, wasteful exercise which certainly wasn’t worth the $43,000 charged to taxpayers per session day.
According to Representative Jeannie Ives (R-Wheaton) who produced a summary of the special call back session on 6/19, the special session was a waste of time, although it did net a committee through a voice vote to study pension reform further. Following is the composition of the committee and the task with which they are charged:
Not since 2005 has a conference committee been used, when lawmakers used it to vote on a non-discrimination bill. Even so there is no guarantee that what a committee drafts would become law. Needing approval by both chambers it could face the same problems as the existing pension legislation. An additional legislative session has been scheduled for July.
Rep. Ives is an advocate for real reform for Illinois, along with her colleague in the House, Rep. Tom Morrison of Palatine. Both believe lawmakers should be working to take Illinois into the future by modernizing its retirement systems
Happening instead is that Democratic lawmakers under pressure from government unions are seeking to double down on Illinois’s failed defined benefit system even though defined pension plans are unmanageable, unaffordable and unpredictable because they force government to make promises to retirees based on assumptions politicians can’t deliver.
The math just doesn’t add up! A 1995 pension reform law designed under Gov. Jim Edgar was to have the pension system 90% funded by 2040. This assumption was based on investment returns netting 8%, making the payment of big pensions doable, but consider today’s environment where Treasury Bond yield is at 2%.
According to the Commission on Government Forecasting and Accountability, nearly 60% of the state’s unfunded liability is due to flaws of the defined benefit system. A report by the Illinois Policy Institute echos this claim. In actuality, the state paid $8 billion more into the pension funds than was required under Gov. Jim Edgar’s 1945 reform plan.
Reps. Ives and Morris have long rejected the notion that only two options exist to fix the state’s public pension system — the Madigan way or the Cullerton way, They are firm supporters of House Bill 3303 which is based on the plan of the Illinois Policy Institute.
Recently the Chicago Tribune published a Letter to the Editor from Rep. Morrison in which he defended HB 3303. In his letter Rep. Morrison states:
Illinois House Bill 3303 has recently been called a distraction, and that’s unfortunate. It is a bill that would freeze public sector benefits to date and going forward would include employees into a 401 (k)-style retirement plan. The true distraction is the notion that there are only two options to fix the state’s most broken public pension system. Taxpayers and public sector employees must understand that if either House Speaker Michael Madigan’s Plan, Senate President John Cullerton’s plan or some compromise bill were to pass, we’ll still need a thorough overhaul of the pension system in the future.
HB3303 would reduce Illinois’ unfunded liability by 46% ($46 billion), bring the total liability down to $55 billion from $101 billion.
This plan also protects constitutionally guaranteed benefits already earned by retirees and current workers.
Finally this plan empowers current workers — not politicians — to control retirement savings going forward.
Monday, June 24, 2013 at 08:11 AM |Permalink