Friday, October 11, 2013

A Response to the Chicago Tribune’s Recent Editorial

“… [G]rab your pencils and calculators, dear readers. We've got a little math quiz for you: Add up the days between June 19, when legislators established a pension conference committee, and Oct. 22, the start of their fall veto session. What do you get? We'll help: 125 days. Now take that number and multiply it by $5 million, the amount the state's unfunded pension liability grows each day. What's your answer?

“Please, allow us to assist: $625 million. That's how much your liability will have grown by the time lawmakers reconvene in Springfield this month. Add $80 million in debt if they adjourn, again, on Nov. 7 without reform. And then keep adding $5 million each day after that…

“Last year, 10 states made major changes to public employee retirement plans, according to the National Conference of State Legislatures. States increased employee contributions, raised retirement ages, reduced cost-of-living adjustments, created new 401(k)-style options — you name it. Reforms vary state to state. But the goal is consistent: to save dangerously underfunded systems.

“Illinois changed pension benefits for new workers in 2009. But lawmakers have not revised the system for existing employees. Those employees — teachers outside Chicago, university employees, state workers, judges and General Assembly members — depend on a pension system that in total is only 39 percent funded. Compare that to the state of New York where pensions are fully funded and lawmakers still passed pension reform last year to reduce the state's future obligations. How wise and responsible of them...

“Had Illinois legislators passed aggressive pension reforms three, four, five years ago, our courts could have ruled by now on any challenges. We would know where we stand. We might actually be realizing pension ... wait for it ... savings…"

from the Chicago Tribune Editorial: Real decisions and no decisions


“Grab your pencils and calculators, dear [Editorial Staff]. We've got a little math quiz for you [too]: Add up all [the years when… legislators stole money earmarked for the public pensions systems to pay for state services rather than raise taxes…] What do you get? We'll help: [$30 billion from the pension systems, $15 billion from the Teachers’ Retirement System alone]. Now take that number and multiply it by [9.1%: the average return for investments over the last 30 years for TRS…]. What's your answer?”

Since 1953, Illinois policymakers have consistently failed to make the annual required contributions to the state’s pension systems, primarily because they could pay for services and their “pet projects” without raising taxes; in 1995, policymakers created a flawed re-funding schedule, and they have refused to correctly amortize the pension systems’ unfunded liabilities since then. Instead they have favored corporate interests rather than the interests of their citizenry and; thus, they have sabotaged the public employees’ retirement plans and the State of Illinois’ future economic solvency through mismanagement and fiscal irresponsibility. State policymakers left us with a fiscal disaster, and so-called “pension reform” or breaking a constitutional contract will not resolve today’s $100 billion unfunded liability. “Had Illinois legislators [paid into the pension systems throughout the years…], we would know where we stand. We might actually be realizing pension ... wait for it ... savings.”

You state: “Illinois changed pension benefits for new workers in 200[10]. But lawmakers have not revised the system for existing employees…” Perhaps it is because A plain language reading of the Pension Clause’s text makes clear that governmental entities may not reduce or eliminate a public employee’s pension payments and other membership entitlements once the employee becomes a pension system member. At the same time, the plain language also indicates that an employee’s pension payments and other membership entitlements are ‘contractual’ rights that may be presumably altered through mutual assent via contract principles. Further, the Clause’s prohibitory language against the diminishment or impairment of pension benefits is cast in absolute terms and lacks any exceptions…” (Eric M. Madiar (2011), Is Welching on Public Pension Promises an Option for Illinois? An Analysis of Article XIII, Section 5 of the Illinois Constitution) (link: Illinois Pension Clause’s Convention Debates, Text and Historical Background). 

We are tired of skewed coverage regarding the Illinois public pensions’ unfunded liability. We are tired of hearing about Illinois credit ratings and from writers who blame the public pensions for the state’s fiscal morass. And we are tired of the media’s omission of the most significant facts about public pension debt and anyone who talks or writes about bond ratings, cuts to services and the siphoning of the state’s money from education, public safety and human services because of “failed pension reform.”

Every editorial, every article and interview, and every legislative session about Illinois public pension reform should begin with these statements:

The public pension systems were not and are still not the cause of the state’s budget deficits. The state’s budget deficits were triggered by past policymakers’ corruption, arrogance and irresponsibility and are currently perpetuated by some members of this General Assembly. The state's pension debt and revenue problems need to become our legal and moral emphasis. Breaking a constitutionally-guaranteed contract with the state’s public servants is the wrong focus! To reiterate, this flagrant disregard for the State and U.S. Constitutions will not address the State’s incurred unfunded liability or its revenue problems.  

Glen Brown

1 comment:

  1. The specious argument by Illinois politicians that “what will be given will be less, but at least there will be something”:

    “And such an opening statement should be followed by our historical and legal comprehension that in Illinois (especially), there will be no safeguard constitutionally or morally to prevent the pilfering, misuse, or diversion of expected or even promised funding for workers’ retirements by future members of the General Assembly, the Governor’s Office, or the Speaker’s. This has been a systemic corruption and dysfunction refusing to meet promises made, promises understood.

    “Any reform that emerges from committee or populist will fall far short of what will be necessary to alleviate the imbalances of years of non-payment as required. The contrived political solution this year or next will never fully satisfy the funding deficits in the state, nor will the General Assembly ever look at anything significant (progressive taxation, transaction fees, amortization of past pension debt, etc.).

    “They will need to return for more concessions, more impairments and diminishment of earned benefits; all to be performed out of necessity or the good of “all of us.” They will take away what they already owe under the specious argument that what will be given will be less, but at least there will be something. This is the mantra they have been taught and bought to say, to believe, and to enact” (John Dillon).