From Dave Urbanek, Director of Communications for Teachers’ Retirement System of the State of Illinois

“A recent guest view by the Illinois Policy Institute in the Aug. 22 edition of The State Journal-Register about public pensions in Illinois purported to lay out a case to prove that ‘pension reform for Illinois is essential, not impossible’ and then suggested various reforms.

“However, that opinion column only exposed some common misconceptions about the actions that have been taken to overhaul the way public pensions are financed in Illinois. In the last eight years, Illinois has done more than almost any other state to reform its public pensions.

“It is incorrect to claim that the high costs currently paid by state and local governments for teacher and public employee pensions are the result of ever-increasing salaries and benefits. The cost is high because Illinois leaders throughout the 20th century consistently underfunded public pension systems so they could spend more tax dollars on other priorities.

“Since 1939, Illinois officials have never once set aside enough money to fully fund the state’s pension promises. As a result, Illinois now carries an unfunded pension liability of $129 billion. Currently, 75 percent of the $8.7 billion Illinois is slated to pay for pensions in fiscal year 2019 is dedicated to the unfunded liability, not the actual cost of benefits.

“If pensions had been properly funded over the last 80 years, the state appropriation for pensions would be an estimated $2.2 billion. That’s a difference — a savings — of $6.5 billion, without even discussing the cost of benefits.

“The guest view also outlined a four-point program to ‘reform’ public pensions in Illinois. Three of the four proposals already are law in Illinois.

“The first, a change in the Illinois Constitution’s Pension Protection Clause to allow ‘unearned future benefits’ to be altered, has never survived the legislative process. Yet, even if the state constitution were changed in this way, it would not reduce the $129 billion unfunded liability. Those benefits already have been earned and still have to be paid.

“The second — ‘raising the retirement ages for younger workers’ — was enacted in 2010 as part of the Tier 2 benefit structure.

“The third — ‘capping maximum pensionable salary’ — has been part of state law since 1979. In fact, there are two caps for younger workers because Tier 2 imposes a separate cap on pensionable wages.

“The fourth — ‘doing away with guaranteed permanent benefit increases in favor of a true cost-of-living adjustment pegged to inflation’ — was enacted in 2010. In fact, the cap on the Tier 2 annual increase is stricter because it is one-half the rate of inflation.

“In addition, since 2010 Illinois officials have passed laws that gradually phase out all state financial support of teacher and government worker pensions. By design, Tier 2 members ‘overpay.’ They fund 100 percent of their benefits and subsidize Tier 1 benefits with their payroll contributions. Tier 3 benefits, when implemented, also will be fully funded by members and school districts. In the future, after the last Tier 1 pension is paid, the state will not pay a dime for any Tier 2 or Tier 3 pensions” (The State Journal-Register, August 28, 2018).