Pritzker: No ‘silver bullet’ for pension crisis
Gov. J.B Pritzker touted his record on pensions, claiming his administration reduced pension debt. He cites an analysis of state pension data but fails to mention its conclusion suggesting reform.
Gov. J.B Pritzker defended his record on pensions in a candidate questionnaire with the Chicago Tribune, giving a dismal outlook on pension reform.
“There are no silver bullet solutions that address the pension mistakes made by previous officeholders over the last few decades, and it’s important to recognize that the state is obligated to pay retirees what they are owed,” Pritzker said.
True, there is no such thing as a silver bullet. But constitutional pension reform – which Pritzker has routinely ignored – is the only real path toward protecting the funds from insolvency in the long term.
A “hold harmless” pension reform plan developed by the Illinois Policy Institute would save the state $2.4 billion in the first year and more than $50 billion by 2045. It would fully eliminate pension debt in that time while preserving all promised benefits to public employees for work already performed.
Pritzker claims his fiscal policy has done more than enough to address the state’s pension crisis.
“That’s why we are using this year’s budget surplus to pay down pension debt beyond the required amount, we have expanded the pension discounted buyout program, and we are achieving long-term investment returns in excess of the long-term targets,” he said.
Pritzker is referring to an analysis from Segal, an actuarial firm that estimated the state’s pension debt decreased by $14 billion last year to $139 billion. But that was only one of Segal’s estimates based on present day values.
Segal’s evaluation using actuarial standards say the decrease is closer to $2 billion. Investment returns more than tripled state projections thanks to pandemic-related stimulus and low interest rates.
Another estimate from Moody’s Investors Service puts the total debt at $317 billion. Regardless of which estimate you look at; Illinois still has more pension debt than any state.
What Pritzker fails mention, however, is the report’s conclusion recommending overhauling Illinois’ pension polices.
“(T)he funding plan under (Public Act) 88-0593 produces employer (State) contributions that are actuarially insufficient, meaning if all other actuarial assumptions are met, unfunded liabilities will still increase due to the State contributing an amount that is not sufficient to stop the growth in the unfunded liability,” the report states.
Essentially, the one-year reduction is far from a trend, and only pension reform can reduce Illinois’ pension debt long-term. Segal recommends a 100% pension funding target instead of the current 90% goal.
When asked about a pension reform referendum amending the state constitution, Pritzker shut down the idea of leaving it up to voters.
“There’s more work to do on pensions but paying what we owe and using the tools currently available to us, as described above, are making a difference in addressing these challenges.”
If Pritzker trusts Segal’s math on pension debt, it means he should also trust its recommendations for reform.