Illinois Starts Nibbling at the Edge of Pension Reform

Solutions a far cry from dealing with issues of sustainability


A couple of weeks ago, Illinois Gov Pat Quinn's office introduced a Disneyesque cartoon snake to explain to constituents to the state's extreme public pension problems and to encourage them to yell at the state legislature to fix it all somehow. (Without suggesting anything in particular)

Last week, that "somehow" was introduced with a bill to make some changes to the state's pension program. The (Springfield, Ill.) State Journal-Register detailed some of the basics:

State employees, teachers, university employees and legislators would pay more for their pensions, receive reduced cost-of-living increases in retirement and retire later under a plan to be introduced Wednesday by a group of House Democrats.

The reduced COLAs also would apply to already retired state employees.

But the plan also creates protections aimed at ensuring that state government meets its pension funding obligations in the future, including allowing court action and the "intercept of other state funds," according to a summary of the proposal obtained by The State Journal-Register. Underfunding by the state is the main culprit in the state's $96 billion in pension debt.

There is a bit of resentment by Illinois unions for being treated like the bad guys, given that the state is responsible for not paying its side of the pension debt. Part of the union-flavored responses I tend to see on these pension reform proposals is an inability to get past the cause to the solutions. Why should they be punished because the state didn't pay its share?

Beyond the likelihood that current public sector employees most likely benefited with above-average salaries for the state's failure to squirrel away money, the response is notable for insisting that the damage had been done just shouldn't have been done. I am reminded of a Kids in the Hall sketch of a restaurant customer upset because the waiter took too long to bring him a check. When the waiter attempts to correct the oversight, he cannot: the customer will not be satisfied unless the check is brought when he asked for it … in the past. Enjoy Canadian comics in wigs and drag (and Dave Foley and Bruce McCulloch having competing psychotic breaks):

Elsewhere, the Illinois Policy Institute explains how the proposal to fix Illinois pensions falls short by sticking with defined benefits rather than shifting to defined contributions (even a new plan for educators is a hybrid approach of defined benefits with additional potential payouts depending on fund performance).