Springfiled must create meaningful pension reform
Illinois lawmakers are scheduled to return to Springfield on Tuesday for their fall veto session.
We have three priorities for them before they adjourn until 2014.
1. Meaningful pension reform.
2. Meaningful pension reform.
3. Meaningful pension reform.
Is that clear enough?
We add the word “meaningful” in front of “pension reform” because a proposed bill being discussed in a legislative conference committee doesn’t qualify as real reform.
Illinois’ five statewide pension systems are underfunded by about $100 billion and growing. Taxpayers simply can’t afford to pay the overly generous benefits that state retirees receive, including automatic 3 percent cost-of-living increases annually.
The bill being discussed in conference committee would change the automatic COLA to half the rate of inflation. Over the past several years, that would have meant a significantly lower COLA than the 3 percent currently added annually. But what happens if inflation soars? Can anyone predict that 10 or 20 years from now, inflation won’t hit 8 or 10 percent or more?
Any pension reform must be sustainable over the long term, and this proposal would not be.
The conference committee’s proposal also would lower the amount that public employees must contribute to their pensions by 1 percentage point. If anything, public employees should contribute more to their pensions.
Democratic lawmakers say the contribution reduction is necessary so reform passes an expected court challenge. A provision in the state Constitution says that benefits for public employees cannot be diminished, and public employee unions have vowed to sue the state if pension reform takes away any benefits.
The problem is, if the benefits aren’t reduced, at some point there won’t be enough money to pay any of them. A reasonable pension paycheck is better than no pension paycheck.
Every day pension reform does not get passed, the unfunded liability grows by millions of dollars.
There are other issues facing lawmakers in the fall veto session, but none of them approach pension reform in matter of significance.
For the sake of Illinois’ future solvency, we urge state lawmakers to pass meaningful pension reform.