To fix Illinois’ pension crisis, first change its constitution

To fix Illinois’ pension crisis, first change its constitution

Illinois allocates more of its budget to pensions than any other state, but pension spending has only skyrocketed. A constitutional amendment is the only way to reform the state’s unsustainable and underfunded pension systems.

Daley College Professor Mike Crenshaw is far from retirement, but he constantly worries whether the State Universities Retirement System will be solvent for him.

“I have 20 years until I can retire, and my biggest fear is that the money’s not going to be there,” Crenshaw said.

Since 2000, Illinois’ pension spending has grown by over 500%, compared to total spending that grew by 15%, and it hasn’t solved the problem. SURS and the other four statewide pension funds in 2021 had 40% or less of the funds they will eventually need.

“My question has always been, ‘How is this sustainable? How can you possibly keep this going at this rate of paying people this type of money?’”

It’s not sustainable. Payments to pensioners increase by 3%, compounded, annually – a doubling every 20 years. As a result, Illinois dedicates more of its budget to pensions than any other state, yet the five systems have grown a $317 billion deficit by one estimate.

Because pension benefits are defined in the Illinois Constitution, only a constitutional amendment approved by voters could change pension structures. Amending the constitution would open the door to changing the compounding raises to simple inflationary adjustments – protecting the systems for retirees and ending the excessive drain on taxpayers.

Crenshaw said he wishes he could have the option of handling his own finances and retirement. Because his money is tied up in SURS, he also can’t touch it in case of an emergency.

“I just feel that as a taxpayer, I should be able to decide when I give, and receive, my money. Also, I should be able to decide whether I want to contribute to a pension,” Crenshaw said. “I know how to budget my own finances from month to month. That’s something that I teach in my classes.”

In 2013, lawmakers got behind the idea of pension reform, and passed legislation reducing annual pension liabilities. The Illinois Supreme Court ruled the law invalid because the Illinois Constitution states public employee benefits cannot be diminished.

The law would’ve improved the chances of a funded retirement for workers such as Crenshaw.

A constitutional amendment is the only path to reforming pensions systems, specifically the 3% compounded annual increases. A “hold harmless” pension reform plan developed by the Illinois Policy Institute increases the funding requirement from 90% to 100%, guaranteeing no empty promises for public employees.

Crenshaw wants change.

“I’m hopeful that someday my dream can come true of me actually being able to spend my own money.”

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