What would happen if the current proposals for pension reform are passed? Some of the proposals from Governor Quinn’s pension committee include the following: public employees should contribute more for continuing in the Tier I defined-benefit pension plan; there should be a 401 (k) defined-contribution savings option; there should be the formation of a capped salary with an attached hybrid plan option (401 k) for current teachers; the retirement age should be raised for full benefits; the state’s “normal costs” (they do not include the service debt) for the Teachers’ Retirement System and the State University Retirement System should be shifted to local school districts; the Cost-of-Living-Adjustment (COLA) should be reduced for current teachers (and possibly for retired teachers, if it is judged “constitutional”); there should be a reduced calculation of the anticipated average for the TRS investment returns; and teachers currently in the Tier II plan (because of SB 1946) should merit a decreased contribution rate. These proposals are supposedly contingent upon policymakers guaranteeing the statutorily-required contributions to the public pension systems. Really!?
It is noteworthy that the exploitation of governmental policies, that are often written or subsidized by the Civic Committee of the Commercial Club of Chicago, creates a financial deprivation for the vast majority of people in the State of Illinois. Each new tax break for the wealthy, for instance, means less money to run the state’s government and; thus, it requires policymakers to get money elsewhere or to cut essential services (Of course, the Chicago Tribune, the Civic Committee and its obverse Illinois Is Broke website, and others will continue to blame the teachers’ pension for cuts to services). Despotic governmental policies will not revive the Illinois economy and produce jobs. They will have, however, a negative economic impact on the state’s economy because retirees and most other middle-class taxpayers will be forced to reduce their spending.
Consider that of the nearly 88,000 retired teachers in TRS, there are approximately 52,000 pensions below $50 thousand; more than 17,000 of them are less than $20 thousand (TRS). These people do not receive Social Security and, if they do, it is minimal. To further reduce the COLA for these people would lead to the impoverishment and destruction of their right to self-preservation. Reflect upon the fact that a “simple” COLA will not be sufficient for keeping pace with inflation for current teachers when they retire, and that members of the Civic Committee, Civic Federation and General Assembly will never have this concern.
It is incongruous that nothing in these proposals will address the revenue problem in the State of Illinois or its self-induced debt problems. What will be most certain if these proposals are passed are costly lawsuits at the taxpayers’ expense to defend what is explicitly stated in the Illinois Constitution’s Article XIII – General Provisions, Section 5. Pension and Retirement Rights: “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired,” and in Article I – Bill of Rights, Section 16. Ex Post Facto Laws and Impairing Contracts: “No ex post facto law, or law impairing the obligation of contracts or making an irrevocable grant of special privileges or immunities, shall be passed,” and in the Constitution of the United States of America, Article I, Section 10: “No State shall… pass any ex post facto Law, or Law impairing the Obligation of Contracts…”