Facing a $100 B unpaid pension obligation debt that is causing the state's credit ratings to hit bottom, Illinois lawmakers have been negotiating for months to fix the problem that's been decades in the making.
Longtime Illinois Review reader and retired Illinois state worker Frank Goudy lined out his concerns about Speaker Madigan's pension reform proposal that the top four legislative leaders have agreed upon and is scheduled to be voted on next Tuesday at the State Capitol:
This is a no-win situation, and it is entirely due to the fault of politicians who have granted excessive pensions (for a few people, but not all). Some well-connected people have gotten huge raises in their final years, some unions have done the same thing for larger number of employees, and of course, the 5+5 early retirement plans granted by Edgar and Ryan have not helped. But most importantly, the state being a deadbeat for the past 50 years and that have been the final straw.
People like Madigan, who has been in the General Asssembly for the past 42 years, should have some explaining to do. Instead, he has joined the Chamber of Commerce and Civic Committee types and attacks state employees. And since he often backed unions in the past, well what can you expect from this type of creature?
Interestingly, there seems to be no attempt to change the larger pensions that judges, legislators and so-called safety workers receive. Their higher pension formulas are still preserved.
Taxpayers have a right to be mad. But so do many state workers who just do their jobs, paid their 8% contribution (yes, that includes me who started in 1971), did not get huge last minute salary hikes, and did not get ever escalating salaries by climbing the greasy pole of administration. This includes most university faculty, school teachers, and other lower level politically unconnected state workers.
As to the COLA issue which seems to be the 'biggy', a few thoughts and substantive insight. Since 1969, those in the state pension funds have contributed .5% SPECIFICALLY to fund the 3% COLA. Was this enough? I must admit I have not done an analysis on this. I do know that when I started in 1971, the DOW was under 900. The gains by the pension funds have been tremendous during the subsequent decades. I also know that Social Security recipients have never paid a designated amount for their inflation proof COLA. And yes, I would be pleased to chuck my 3% of the CPI formula whatever that might bring. I also know that no one complained about this 3% when inflation ran 10-12%. Funny how that works.
And I would not be surprised to see inflation rear its ugly head again with the way the FEDS print and borrow money. And very interestingly, the state wants to basically decimate the COLA for those who have been retired for years and then have the gall to state that this is OK because they will reduce pension contributions by 1%. DUUHHHH, how does this help those already retired and who paid in that .5% for many decades? Are they going to get some huge refund check that includes the amount they paid plus the amount earned by their pension system on that money over the years? I guess the BIG 4 who advocate this bait and switch tactic hope that no one figures this out because they are too stupid or that so many people are resentful that they could care less.
I know this, that my high pension (yes much better than SS) is due to many factors that some are unwilling to admit. Such as, in 1971 I was contributing 8.0% while those on SS contributed 4.6%: SS 'invests" in low return treasury IOU's while my pension was actually invested in real assets with the difference in earnings over several decades being hugely different; that SS redistributes ala Obama style from middle to upper middle income workers to low income workers thus making it a real screw job for those who have contributed the most while the state pensions do not do that; and that SS even allows spouses who never contributed one dime to SS to automatically receive 50% of the contributing spouses check while if you don't contribute to the state plan you get 0, Nada, nothing as a pension.
Will be pleased to debate the Illinois Policy Institute, Chamber of Commerce and Civic Committee on this issue at any time. And I am certain I would agree with some of their points. But for those who read the Illinois Review, I would hope that you would weigh carefully and thoughtfully on their arguments in the same light as you would IFT or AFSCME.
