Memory Redux: Fighting Pension Amnesia
They’re back…
Less than a year after an austere judicial response by a
unanimous Illinois Supreme Court to the General Assembly in Illinois and its
political leadership that the attempt to curtail the benefits of public
employees earned and protected under the Constitution is forbidden – they’re
back at it again.
The Governor is promising an extra $billion to use for
programs strangled by his refusal to govern if only Senate Leader Cullerton
would hurry up with “his” Pension Reform package – in essence a plan for those
currently working in the public sector to select between two types of
diminishment and impairment.
Representative Elaine Nekritz, Rep. Batinick, and Rep.
Fortner are playing with opt-outs or lump sum payments in lieu of pensions.
The Editorial Board at Tribune disingenuously drones that
Illinois’ fiscal debt is more a result of sweet deals made with unions than a
regretful history of legislative irresponsibilities. And conveniently disremembers the May 8th
ILSC decision on SB1.
Meanwhile, the Tribune’s Voice of the People accepts what
appears increased complaints from forgetful individuals who blame union workers
and embrace a rewritten history quite fashionable in Gov. Bruce Rauner’s
mansion(s).
I was pleased to receive an email correspondence from the
leadership of the West Lake Shore Unit of the IRTA this afternoon. Please see below:
“Dear Fellow
IRTA Members,
This is a
piece written by Al Popowits, Legislative Committee WLSU. His information
about the history of the pension dilemma in Illinois is worth reading.
Marjorie
Sucansky
President
West Lake Shore Unit
‘Dear Board Members,
Recently
a conservative writer blamed Madigan and the Democrats for the state’s fiscal
mess. I thought it useful to give a historical perspective of the problem in
order to highlight the culpability of both political parties.
Al
Popowits
A recent contributor to Viewpoints stated that Michael
Madigan was the main culprit responsible for Illinois' financial mess. In doing
so the writer ignored the contributions of previous Republican and Democratic
governors.
Illinois pension woes date back nearly a century. However,
today’s crises took root under Governor Jim Thompson. In 1989 and 1990s
the four term Republican signed off on sprawling pension packages that granted
generous cost of living allowances to retirees.
In 1994 Republican Governor Jim Edgar conceived of a fifty
year program-“the Edgar Ramp” to stabilize the state’s retirement systems. The
governor’s goal was to have the five systems 90% funded by 2045. For the first
fifteen years state payment levels were set artificially low, and then ramped
up significantly in later years. The hope was that future leaders would somehow
find the billions of dollars to make up for the deficits. In 2016-’17 the ramp
required a state contribution of $7.6B-one out of every four dollars in the
state’s general fund. Some have described the Edgar Ramp as a “balloon payment
on steroids”.
When in 2002 it became obvious that the Democrats would
retake state government, then Republican Governor Ryan signed off on a
lucrative exit package for thousands of state employees who got their start
under Republican administrations. His plan gave them the option of speeding up
their retirement by buying age and service credits. Eleven thousand
employees took the offer at a cost of $2.3B.
In 2003 Democratic Governor Rod Blagojevich signed off on
a $10B borrowing plan to give the state’s five pension funds new cash. The
state owes $15B in principle and interest through 2033. However, the plan was
an actuarial success in that the retirement systems investment returns varied
from 8.43% to 9.25% whereas the original borrowing rate was on 5.047%. The
successful plan raised the systems’ funded ratios from 49% to 61%.
Unfortunately, the legislature used the good news to declare pension holidays
in 2006 and 2007. One sponsor of the bill later acknowledged that he and his
colleagues did not understand the cumulative impact of differing financial
obligations into the future.
In December of 2013 Speaker Madigan crafted pension
cutback legislation. He assured the legislature that it would pass
constitutional muster. The legislation was signed by Democratic Governor Pat
Quinn. The legislation supposedly would save $160B over 40 years by
substantially reducing the pension benefits of retirees and current employees.
In May of 2014(sic) the State Supreme Court unanimously declared the legislation
unconstitutional.
Last July Governor Rauner proposed a plan that he said
would save billions of dollars by reducing pension benefits and weakening labor
unions. Little has changed.
There are well-known solutions to Illinois’ financial
difficulties. However, they have been eschewed by both political parties
because they require painful choices.
The great statesman Winston Churchill once remarked that
Americans would always do the right thing…after they’ve tried everything
else. It appears that Illinois legislators are not yet finished
trying everything else.’”
There is one point that is missing in Al's account - the role of corruption in each of the pension decisions.
ReplyDeleteActually, who gave what to whom and how much did so-and-so make from doing this managing and that loan and that bond deal and that legal fee, and the deal to ramp how much after how much...
Well, Al was right to list what he did. Corruption and the trail of money in Illinois is too immense a calculation for Einstein and too great a task for Hercules.
Thanks Al, Marge and John.