A Letter Penned to Illinois House Minority Leader Jim Durkin

A Letter Penned to Illinois House Minority Leader Jim Durken

February 22, 2019

Dear Representative Durkin,

I read with great interest your observations on the dangers of new-Governor Pritzker’s extension of the pension payment program in order to save money.  It is not often that a Republican Leader and the IRTA (Illinois Retired Teachers Association) often agree, and so emphatically.  (see below)

“The Governor recommended reducing contributions to TRS by $576 million dollars in his budget address. He is basing this reduction on his anticipated legislation that would add 7 years to the ramp, making the date to reach 90% 2052 instead of 2045. Essentially, this reduces contributions annually by several hundred million dollars. He is also proposing, and anticipating savings from, an extension of a buyout program that was passed last year but never put into place. This proposed pension holiday of $1 billion a year for every year of Pritzker’s term will ultimately cost the State of Illinois taxpayers around $150 billion. It is impossible to know the exact amounts until TRS performs an analysis.” (IRTA)

On the other hand, you also call for an immediate reduction in benefits for pensioners, one that both the Tribune and city mayoral candidate Bill Daley promote.  

If I am wrong, and I’d like your opinion, that avenue was closed in May of 2015 when the Illinois Supreme Court ruled unanimously that any or all benefits earned or even accrued during a public employee’s work career are protected from any impairment or diminishment.   Even (as in Kanerva), additional ancillary benefits like health care are shielded from reductions.  

The Illinois General Assembly later designed two new Tiers (II and III) to reduce the benefits available to any of those employees entering the work force after 2011 and 2019 respectively.  Hasn’t the reduction in benefits already taken place through legislative action, Representative Durkin?  Tier II employees are effectively paying more than they will ever receive in return after retirement, will have only a simple COLA, and will retire later in life to avoid significant penalties.  Tier III employees will work an entire career paying more as well, and they will never break even on the payments made to the system unless they toil for over 50 years in the field.  

Here’s how I see it: Tier I employees are protected.  Period. We may be expensive, but we are a diminishing population.  I suppose that’s one positive takeaway.  Is my observation wrong?

In fact, Tier II and Tier III employees are paying for Tier I, and they will never recoup the payments they have made into the pension system; thus, they are working to repay the unfunded liability owed to TRS for decades of the state’s shorting the necessary payments.

That brings me back to your and the IRTA’s critical observation.  Why on earth would Governor Pritzker, especially with an advisor like past Governor Edgar, decide on an extension of the original postponement of paying what’s due, one which will increase the unfunded liability and the interest (compounded) that is attached to it?  The “ramp” plan adopted in 1995, if not so detrimental, would be laughable in the increased accumulation of debt as payments were once again calculated to avoid full payment, etc.  

We have communicated before, and I look forward to your thoughtful response.

Sincerely,

John Dillon