Illinois “Pension Reform” Mania

All we can hope for now is that the governor and Illinois legislators make an ethical and legal decision regarding their single-minded “pension reform” (as if this is the sole solution for the current state’s revenue and debt problems!).  We can also hope that we will be receiving information from the Illinois Education Association’s and the Illinois Federation of Teacher’s leadership regarding an alternative, reasonable and fair plan to challenge the disastrous, unconstitutional “pension reform” bill proposed last spring by Representative Tom Cross (with intractable House Speaker Michael Madigan’s approval) and his “special interest” group, the Civic Committee of the Commercial Club of Chicago. 
 

Timing, good sense, and a message of “constitutionality, fairness and sustainability” are still essential components of any counter proposal. For the rest of us, personal contacts with legislators are crucial. Person-to-person meetings and telephone conversations should have already been established and continue.  We can remind our legislators that their decision about such “reform” should not be prompted by political despotism, in other words, one that is based upon autocratic and arbitrary self-interest, fallacious information and a predisposition for unanticipated consequences – all quite apparent in last year’s fall and spring legislative sessions. 

It is regrettable that most people and many Illinois legislators do not care whether teachers and other public employees have “contributed responsibly to their pension funds” or that teachers will receive [little to] no Social Security when they retire.  Of course, legislators have heard this mantra, and they believe that it does nothing to solve the perceived, inherited problems at hand.   

It is troublesome that most people and many legislators do not care whether retired teachers’ and other public employees’ defined-benefit pension plans are a fundamental source of economic stimulus to communities in Illinois and the only retirement income for hundreds of thousands of people.

Most people and many legislators are oblivious or do not care that the “State of Illinois has not consistently paid its full constitutional and obligatory contributions” to the public pension systems throughout the decades, that this money was diverted to other operating expenses and “special interests’ groups,” that the State of Illinois saved approximately $15 billion (this figure does not include the amount of accrued interest that would have been earned) by not paying what actuaries have calculated the Teachers’ Retirement System should have received throughout those years, that this theft also enabled the State of Illinois to provide services for its citizenry without raising taxes during that time, and that this money was deferred-earned income for teachers in Illinois. 

It is true that only a few stalwart retirees have attempted to respond to the Civic Committee's or the Chicago Tribune's diatribes and educate the ill-informed populace these past several months.  It is also true that numerous teachers and retirees (and their families) care a great deal about the possible destruction of their pension plan, their only retirement income.

It is obvious Illinois legislators do not possess the resolve to take on an inadequate fiscal system that fails to generate enough revenue growth to properly maintain state services and pay state expenditures for health and social services, education, government, transportation, capital outlays, public protection and justice.  Many legislators are the Civic Committee’s co-conspirators, and public employees are the victims.  Be that as it may, Illinois legislators should transform the state’s failing revenue system and unfunded pension liability. 

Therefore, it is our responsibility to tell our legislators what many of us want: a progressive tax rate that 43 other states utilize; a broad-base tax base; a better timing of tax payments; an increased taxation on the wealthy; and an end to corporate welfare (extortive tax breaks and various loopholes for corporations) so the rest of us do not have to agonize over more impending, ruinous so-called “pension reform” bills and the elimination of needed services and other legislative folly. 

Although some Illinois legislators do not want to fund the public pension systems next year and thereafter, these legislators assume that they know how to accurately estimate pension assets and liabilities in the future by drawing erroneous inferences from intentionally-biased data provided for them.  We can envisage how some people (especially wealthy Illinois businessmen) can manipulate variables in order to reach a preferred conclusion.  Indeed, it is easier for certain legislators and the Civic Committee and other wealthy organizations to obsess over a pension’s unfunded liabilities (that were caused primarily by not fully funding the systems!), for instance, and not the causes of the state’s financial deficits: its antiquated revenue system and irresponsible budget practices that includes a flat-rate tax system.

It is unfortunate that most Illinois legislators ignore the fact that “a high-quality revenue system relies on a diverse and balanced range of sources [that] will spread the burden of taxes among more payers than a narrow basis does” (National Conference of State Legislators, 2007).  Some Illinois legislators will state that they “oppose raising any taxes to balance the state’s budget.”  Of course, very few legislators want to raise taxes on the wealthy elite that bankrolls them; very few legislators want to raise taxes on middle-class and impoverished voters either (though these legislators have stolen public pension money to pay for their needed services throughout the years). Moreover, when legislators claim that they will not raise taxes, (especially for corporations and the wealthy one percent that finance them), it also guarantees their campaign funding and their votes from their oblivious constituents. 

It is important to remember that legislators can exercise the power to not completely pay the public pension systems over and over again.  Undeniably, many legislators approved a financial windfall for a few Illinois corporations most recently while ironically pondering budget cuts and "pension reform" for the rest of us.  “[Indeed] each new tax break means less money to run state government, [thus] requiring officials to get more money elsewhere or cut services” (Associated Press, November 2011). 

Considering their spring legislative focus, it is apparent that many legislators do not contemplate today’s economic realities: Illinois’ economy has largely become a “services and information-based economy… [and that] changes in personal consumption have resulted in the Illinois sales tax covering a decreasing proportion of consumption expenditures” (Chicago Metropolitan Agency for Planning, July 2011).   

These same legislators also ignore the fact that Illinois “suffers from structural deficits or from failure of revenues to grow quickly as the cost of services…, [and that] structural deficits stem largely from out-of-date tax systems, coupled with costs that rise faster than the economy… Fixing these structural problems would help [Illinois] balance [its] operating budgets without resorting to [an unconstitutional radical 'pension reform' instigated and propagandized by the Civic Committee, Civic Federation, Chicago Tribune and their ilk]” (The Center on Budget and Policy Priorities, January 2011). 

So what should Illinois legislators do? How about finding ways to generate more revenue instead of perpetually attacking public employees' and retirees' pensions? How about restructuring the unfunded pension liability? The Pension Ramp is flawed!  

What can the IEA and IFT offer by way of negotiation this spring on the issue that “something must be done!” about the public pension systems, (in particular, the teachers’ pension system), the unfunded liability, and increasing state payments?  How about defending the Illinois Constitution above all else? 

What can current and retired teachers (and other public employees) surrender that will barely diminish the state’s colossal financial liability created by past-and-present greed, corruption, arrogance, incompetence and self-interest?  Nothing.   

We can only hope that the IEA and IFT leadership has a “plan” to offer in the legislative sessions this spring, and we hear about this strategy as soon as possible. We can only hope our union leadership does not bargain away our constitutional rights and benefits. 

Meanwhile, what we can do is unite with the Occupy Wall-Street Movement in Chicago and protest on South Clark Street, where the Civic Committee conducts its avaricious business practices. We can research the aforementioned subject matter ourselves, become more informed, and meet with legislators to discuss unconstitutional pension reform targeted at teachers and retirees and their families.  Why is this important?  Our individual and collective futures depend upon what we do or don’t do. 

-Glen Brown

For some in-depth analyses regarding Illinois pension issues, click on “2011” of the Blog Archive (on the right) and then the appropriate months for the following posts: “Tax Reform! Not Pension Reform, Budget Cuts and Tax Breaks for the Wealthy” (20 November 2011); “Pension Hybrid Plans, Constitutional Challenges, and the Ethical Path to Take” (18 November 2011); “Sustainability, Affordability and Constitutionality: Are They Compatible” (10 November 2011); “Ask Your Legislator a Few More Questions” (3 November 2011); “A Response to the Chicago Tribune and the Civic Committee of the Commercial Club of Chicago” (22 October 2011); “SB 512 = No Trust in Legislative Leadership” (14 October 2011); “A Letter to My Colleagues and Friends at IRTA, Du Page” (5 October 2011); “Defined-Benefit Plan v. Defined-Contribution Plan, Updated” (30 September 2011); “Illinois May Be Broken, but Not the Civic Committee of the Commercial Club of Chicago” (26 August 2011); “Why Bankruptcy Should Never Become an Option for Illinois” (2 August 2011); “Spread the Burden of Taxes and Address Tax Inequities in Illinois” (25 July 2011); “A Call for Caution for This Fall’s Veto Session” (17 July 2011); “What Will Be Illinois’ Next Move Regarding Its Public Pensions’ Liabilities?” (11 July 2011); “Unfunded Liability and Sustainability of a Pension” (5 July 2011); “Authorized Theft and Greed in Corporate America” (30 June 2011); “What We Believe We Know about the Sustainability of the TRS Pension” (10 June 2011); “How about Tax Reform, The Most Important Issue in Illinois?” (8 June 2011); “Sustainability of the Teachers’ Pension” (5 June 2011); “An Open Letter to All Teachers in Illinois” (30 May 2011); “Illinois Is Broke: an Insidious Scheme” (2 May 2011); “Pensions: An Argument Regarding Sustainability” (28 April 2011); “Should We Blame the Teachers and Other Public Employees’ Pensions for the State’s Budget Disaster?” (27 April 2011); “Blowin’ in the Wind” (24 April 2011); “The TRS Pension: ‘Nothing but the Facts’” (16 April 2011); “An Appeal to Reason: Who Is to Blame?” (12 March 2011); “Wisconsin Might Be an Omen for the Public Employees of Illinois” (11 March 2011).