Pension Reform, Illinois’s Future

(UPDATED: action in House pension committee. See below) by Collin Hitt A bold proposal to reform government employee pensions has been put forward, Senate Bill 512. It is the broadest and best legislation yet introduced by legislative leaders hoping to address the long term debt, and insolvency, of Illinois’s public employee pension funds. Illinois taxpayers...

(UPDATED: action in House pension committee. See below)

by Collin Hitt

A bold proposal to reform government employee pensions has been put forward, Senate Bill 512. It is the broadest and best legislation yet introduced by legislative leaders hoping to address the long term debt, and insolvency, of Illinois’s public employee pension funds.

Illinois taxpayers are at least $84 billion in debt to the state’s pension systems. The crisis is doubly worse for those living in Chicago, whose local pension funds are desperately short on cash and long on liabilities. The upcoming vote could be the most important ever cast by many members of the Illinois General Assembly.

The bill would accomplish three goals for state taxpayers. It would lock into place pension benefits already earned. It would ask employees looking to increase their retirement wealth to either contribute more or receive more modest increases in the future. And it would put in place a more aggressive requirement for the state to fund pensions, which when combined with benefit reforms will lead to drastically lower annual liabilities in the future.

Similar reforms of local government pensions for Chicago and Cook County are also included in the bill, given the crisis within those funds. (The common Chicago household is already paying $1,539 a year towards state and local pension costs; that amount is on pace to exceed $3,300 by the end of the decade without reform.)

Over the last two decades, it has become a political tradition to hand down unconquerable debt to coming generations. Illinois leads states in this tradition, likely the reason why a majority of voters now think that young people will have to leave Illinois in order to find their ideal job. A vote for pension reform will brighten this state’s future – a vote against it is an endorsement of our continued decline.

UPDATED: Senate Bill 512 passed out of the house pension committee, with 6 of 9 members voting to support the measure. Rep. Raymond Poe was the only Republican to vote against the bill. It now sits on the house floor, where it could receive a vote on Friday, May 27. (Click here to see my live-tweet of the hearing.)