Proposed Constitutional Amendment 49 claims to address the state’s pension obligations.
First, given the shortfall of more than $80 billion in Illinois’ five pension plans, voters should ask how Amendment 49 would deal with the money the state owes those pensions.
It does nothing.
Next, voters should ask how Amendment 49 would deal with the benefits promised to states employees or retirees, who accepted work that paid less than the private sector and no Social Security in exchange for a state pension.
It does nothing.
Lastly, voters should ask how Amendment 49 would deal with the future – especially schools, townships, communities, counties and Illinois’ other governmental units (already coping with state requirements on the one hand and late state payments on the other).
It does nothing – except hamstring local officials.
Implying that pension costs are driving the state’s debt, Constitutional Amendment 49 says, “No bill, except a bill for appropriations, that provides a benefit increase under any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall become law without the concurrence of three-fifths of the members elected to each house of the General Assembly.”
If 60 percent of voters agree, they’d change the state constitution, which currently says, “Membership in any pension or retirement system of the state or any 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.”
Glen Brown, a Benedictine University [instructor] and blogger, asked, “Who writes the laws by which Illinois government operates? The Civic Committee [of the Commercial Club of Chicago] and its legislative power brokers. Who will profit from pension reform and a diminishment of contracts and, thus, free up the state’s cash flow and increase its profit margin in Illinois? The Civic Committee and its minions. Who could eventually lose their ‘only’ retirement pension? Teachers and other public employees of Illinois.”
But supporters say it would help prevent unfunded future liabilities, provide better accountability, and require greater consensus.
Also on board are editorial-writing friends who argue that since people are living longer, the amendment makes “good financial sense… For too long, lawmakers’ hands have been tied.”
Hardly! For years, the legislature’s hands have been in the till, taking from pensions rather than making required contributions.
The shortfall in the pension systems stems from “the state’s decades-long practice of intentionally borrowing revenue from ‘promised’ contributions to the retirement systems in order to subsidize the cost of delivering public services,” noted the Center for Tax and Budget Accountability (CTBA) this summer.
Since 1994, the state contributed its pension share just once (in 2004). Four times (1994, ’95, ’96 and 2006), it paid less than one-third of the mandated amount. The amendment misleads; the problem isn’t pension benefits; it’s state contributions.
The state borrowed the funds and now complains about the lenders. Borrowers – even state government – should have no concern about how lenders use money, whether tithing to church, buying a truck or going to ballgames. Just pay back the loan!
The amendment itself would do nothing to pay back what the state took from pension systems (nor compel Illinois to make required contributions). It restricts government employers and employees alike, creates confusion on what’s a “benefit increase,” guarantees an expensive lawsuit, and makes government service less attractive to good people recruited to work here.
Still, some editorialists say that since many private employers have killed pensions – presumably, replacing them with casino-style hopes such as 401(k)s, at best – people should accept that and not plan to retire and “count on others to fund their retirement.” What?
Consumers, stockholders and others fund research, production, marketing, etc.; that’s commerce. And “others” fund roads, schools and police – others who don’t drive every route, have kids in school or are crime victims. That’s civil society.
Also, while 3 out of 5 doesn’t seem like a big deal, demanding 107 out of 177 (36 of 59 Senators and 71 of 118 Representatives) rather than half-plus-1 (90) votes would put a minority in control and give local governments’ power to Springfield – where the problem originated!
The amendment shifts the blame for the legislature’s inability to resist borrowing from pensions and onto the shoulders of the victims of irresponsible lawmakers.
Promised retirement benefits, public workers have paid into their pension plans and planned their lives accordingly.
The solution – paying back to the five pension systems what state government borrowed – needs the General Assembly to negotiate with the pension systems and agree to a workable repayment schedule over the next few decades, not eliminating constitutional rights.