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Pension Issue Unresolved, Cost to Taxpayers Rising

A special legislative session in Springfield last week made no progress. Here, Patch rounds up reactions from local politicians and residents.

No one ever said getting the pension issues in line in Illinois would be easy. State lawmakers have certainly proven that to be the case by the action – or rather inaction – last week in Springfield.

In a turn of events that had all the surprise of say, the sun rising in the east, the Illinois General Assembly failed to act at the special session Friday on the matter of the pension debt that is estimated to be anywhere from $80 - $90 billion. So the issue will not be acted upon until after the November election at the earliest. The cost to the taxpayers was $40,000 for the session.

The only vote taken was in the House on Legislators curbing their own pensions. That measure received 54 yes votes as opposed to 53 against, but it was still six short of passage. That being the case, the Senate didn’t even bother to bring it to the floor.

Gov. Pat Quinn – who called for the special session in July - put the blame for the debacle on the Republican leadership

“Each day we wait to enact comprehensive pension reform, the problem gets worse,” Quinn said in a statement. “The unfunded liability will grow to more than $92 billion by the end of next fiscal year. Illinois is currently on track to spend more on pensions than education by 2016 and that is unacceptable.”

Republicans responded the fault lies at the hands of Illinois Speaker Mike Madigan who has proposed gradually shifting the costs of teacher’s pensions to individual school districts.

“You either reform the underlying system before you change the payment mechanism,” said Pat Brady, the Chairman of the Illinois GOP. “The Republicans are protecting suburban homeowners from a huge tax increase.  I don’t think anybody things Chicago doesn’t get enough money from the state.”

Local representatives dismayed 

As for the local representatives, there was dismay – if not surprise - over this latest turn of events.

“I was not expecting a lot,” said State Rep. Elaine Nekritz (D-Northbrook), who is the Chairwoman of the House Personnel and Pensions Committee and House appointee on Governor’s Pension working group. “To address a problem of this magnitude in one day seemed overly optimistic.”

She was particularly disappointed that the measure that asked lawmakers to make a choice to take a lower cost of living adjustment or give up their retiree health care and any increases in pension income did not pass. Of the state’s five retirement systems, that is by far the smallest. In and of itself, modifying that pension plan would do little to ease the situation, but Nekritz contended it was still an important first step.

“No one thought that would have solved the problem, but if you can’t even lead by example, then we send a bad message to the other systems about the ability to get this done,” she said. “So that is what was frustrating.”

Another local official said the effort was doomed from the start. “We were first called down there to deal with the Derrick Smith matter and not pensions,” noted Rep. Lou Lang (D- Skokie). “It was the Governor that tried to force a pension resolution on a Friday when it was 85 degrees out in the middle of the afternoon. That is not a recipe for accomplishing of value.”

The special session occurred less than 24 hours after with representatives of the people in the proverbial trenches on the subject.

Louis Kosiba, the Executive Director of the Illinois Municipal Retirement Fund, Dick Ingram of the Teachers Retirement System and Erika Lindley of theEducation Research Development which represents more than 80 suburban school districts, took an overflow crowd through the dynamics of the pension system in the state.

Biss believes the years of skipped pension payments and other machinations in Springfield are at the heart of the issue.

“The State of Illinois has not been a trustworthy actor for a very long time. That stinks,” he said. “We lied and we lied and we lied. What did we lie about?  We lied about how much stuff costs.”

No matter how the situation got to where it is today, something will need to be done eventually. But it will have to be done within the confines of the State Constitution drafted in 1970, which guarantees pension rights, but not the funding.

Also, in the case of pension funding, borrow can’t be done from future generations as other entitlements, according to Kosiba.

“The important thing about a government defined benefit pension like IMRF or TRS is we are trying to prefund those benefits so that when a person retires neither the employer nor the taxpayer nor the member are obligated to pay any more money to fund that benefit,” Kosiba said. “We are not like Social Security which is pay as you go. That is the promise of Social Security; the active workforce will pay for the people who retired.”

Lindley, whose school advocacy organization represents 80 districts in the northern suburbs, said there will be pain involved, but there are already people hurting by the status quo.

“We recognize this is going to impact the livelihood of hundreds of thousands of people and we are also facing a situation that is crushing the state,” Lindley said. “We are also facing a fiscal situation that is crushing the state. The pension obligation is at a point where we can’t spend money on k-12 education, higher education and public safety. In fact we are seeing reductions in all those areas.”

What residents have to say

The attendees of the forum came away better informed of the problems, but hardly unified as to what to do.

“The fact that school districts don’t have to pay anything is unbelievable,” said Jo Sawyer, a retired communications consultant from Wilmette.

Joan O’ Malley, a retired school administrator from Glenview went another way. “I’d like to see Springfield tax corporations and stop giving out unnecessary benefits. That is on the backs of the citizens,” she said.

Marcia Krohn, a retired teacher from Northfield did not believe her personal financial future was in danger even as she was a member of the IMRF, but looked at the big picture by saying, “I’m worried about the state and there won’t be any money.”

So what will happen now, especially with all members of both chambers up for election in November?  It’s very hard to predict. But one thing is certain and that is the problem is getting more expensive every day.

“We have to address this problem,” Nekritz added. “I just don’t know when.”

Walter White August 21, 2012 at 07:12 PM
Absolutely. Mensa candidate G. W. Bush did a fantastic job.
TakeBackIllinois August 21, 2012 at 07:45 PM
Thanks, Dan! Good info. When I read your post, I made the assumption you were referring to an Active 401k Plan participant. I would be interested in knowing your position on the 9th District's freshman representative's idea of a Progressive Illinois Income Tax which he so adamantly supports, coming on the heels of the recent 67% state income tax hike. The out-of-touch Springfield legislators have conveniently kicked the Pension Reform political football down the field until after the November elections. Illinois voters need game-on now. I keep on thinking of the popular catch-phrase, "Your Fired!" We need to ALL vote for political change, fortitude and courage - and it needs to start right here in our 9th District with new leadership for the sake of our children's education, our great educators and small business owners which have made the communities comprising of the 9th District great! This is not Rhode Island, Springfield.
Gregg Baker August 23, 2012 at 05:16 AM
The increase from 3% to 5% represents a 66% increase in the tax rate. No one is saying that the tax rate is 66%. There are 7 states that have no income tax, not 6. Alaskans actually get money back from the state as a result of the distribution of the oil money. Tax the retired income? If you were involved with the social security mess you would know that SS income is taxed at a threshold level. You are lucky not to be involved with SS. What the government has done to the pension plan has been criminal. If someone did what the government has done with the pensions, (not funding them, etc) the government would go after them for fraud.
Carl Lambrecht August 26, 2012 at 04:17 PM
High Coat equals High Pension Read the book "The Illinois Pension Scam" .Our schools are in the top 1 percent for cost. Yet in the lower 99 percent for performance. The below link is for Highland Park High Schools report card. http://webprod.isbe.net/ereportcard/publicsite/getReport.aspx?year=2011&code=3404911300002_e.pdf Carl Lambrecht 847 432 8255, lambrecht@laurelindustries.com
Carl Lambrecht August 26, 2012 at 04:18 PM
Read the book "The Illinois Pension Scam" .Our schools are in the top 1 percent for cost. Yet in the lower 99 percent for performance.

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