Voters Need to Hold Legislators Accountable for Pension Problems, Panelists Say
Lee Daniels and other experts talk about fixes for Illinois' pension woes, while Elmhurst District 205 Board says shifting pension burden to local districts would cripple education.
When it comes to state pensions, Illinois is in a financial hole as deep as $90 billion, and digging out will be a formidable task, according to a panel of west suburban experts.
"Pensions have created the majority of the problem in our non-discretionary spending," said Lee Daniels of Elmhurst, former speaker of the Illinois House and now a distinguished fellow and special assistant to the president of Elmhurst College.
Daniels moderated a discussion in Woodridge Wednesday with Sen. Ron Sandack (R-21, Downers Grove), Illinois Municipal Retirement Fund Executive Director Louis Kosiba and For the Good of Illinois Executive Director Bruno Behrend.
"You either raise taxes or you reduce the debt—and therein lies the problem," Daniels said. "Since raising taxes is not an option, the only viable option is to reduce the debt."
Daniels introduced options that have been discussed repeatedly in Springfield for reducing the debt, such as reducing cost of living increases for those covered by state pensions, raising employee contributions, raising the retirement age, limiting public pensions to state employees or shifting the responsibility of teacher pensions to local school districts.
Elmhurst District 205 School Board members have said numerous times that the last option would be devastating to local districts, basically destroying public education as it is currently known.
District 205 School Board President Jim Collins said Tuesday that shifting the burden of pension funding to the local districts "is not a student-friendly thing to do."
"It will translate to increased class sizes and cutting the richness of our curriculum," he said.
He encouraged parents to contact their legislators to let them know they oppose this type of pension reform.
"Anything you can do to make your voice heard in Springfield on this issue we welcome and encourage," he said.
District 205 Superintendent David Pruneau said pension reform is likely by spring 2013. He said House Bill 6204, introducted by Mike Fortner (R-West Chicago), offered a new potential solution that "does not require districts to pay into the pention program."
"It's a different look at pension reform," he said, of the multifaceted proposal. "It's still be studied, but a lot of people thought it had merit."
The bill has been referred to the House Rules Committee.
Reform Will Require a New Mindset
Any proposed changes go to the core of what many state employees were told when they signed their contracts during better times, and those are benefits state employees are willing to go to court to protect, panelists said.
"If you begin with that [mindset] and don't ever pass any law that changes that, there's precious little you could do to avoid insolvency of the funds or massive tax increases, the kind that will literally make businesses flee the state even faster than they already are," Behrend said.
Abuse of the system also is causing a lack of funding for state pensions. Practices such as tacking, where consultants and contractors to the state join pension plans even though they are not state employees; double dipping, in which a state employee may be working while collecting a pension or collecting multiple pensions; and exit spiking, end of career pay raises, are practices legislators want to stop.
"When these rules were written way back when, what was the retirement span—15 to 20 years? Now we're looking at double that. Giving a lifetime benefit based on two pensions ... never was the plan and is unacceptable," Sandack said.
Kosiba, who has been executive director of IMRF for more than 20 years, pointed out that abuse can happen at the local level as well and suggested two ways to stop it: giving citizens the ability to vote on benefits enhancements, and terminating benefits if assumptions aren't realized.
"Any pension legislation that is ever written is based on assumptions," Kosiba said. "There should be a 'clawback clause.' If assumptions don't work out, that benefit [should] be terminated going forward."
Behrend agreed that voters should get the final say on benefits increases. State spending caps would require local municipalities to go to referenda for the increases.
"If this nation had caps on spending, where you had to go to the voters to get [benefit] increases, it would solve this problem," he said.
The mounting pension crisis has gone largely unnoticed for years by many in Illinois; the system could improve if voters make it known to their legislators that pension reform is a priority, Sandack said.
"Illinois is sick. We are problematic. We have so many malformities and issues," he said. "On this issue, hold your elected (officials) accountable. Get in his face, get in her face and say, 'Where are you on pensions?' Find out their position and hold them accountable."