As we begin the new year with a new governor, it is imperative that we finally address Illinois' pension crisis, not simply throwing more money at the problem but also addressing the cost side of the issue. To illustrate the success, or lack thereof, of throwing more money at the problem, one just needs to look at the Teachers Retirement System (TRS), accounting for the bulk of the $130 billion unfunded pension debt owed by the state.
According to TRS, for the period 1981 to 1999, taxpayers contributed approximately 100% of what the employees themselves contributed, leaving the pension fund at a level of 68% funded. Over the next decade, taxpayers ramped up their contributions to 190% of what the employees contributed only to see the pension fund decline to 48% funded. Since 2010, the taxpayers again increased the amount they contributed to 340% of what the employees contributed, only to see the pension fund continue plummeting to be now just 40% funded. Overall, since 1981, taxpayers contributed over 215% of what the employees themselves contributed.
On the expense side of the issue, thanks to a pension clause added in 1970 to the Illinois Constitution, legislators' hands are tied from ever "diminishing" pension benefits. This amendment is the root cause of the pension crisis by locking in all the benefit increases awarded by legislators over past decades while at the same time preventing any attempt by them to lower the cost to the taxpayers. Clearly this is a recipe for disaster. All our legislators need to do to right this wrong is stand up to the powerful union lobby to place a new constitutional question regarding pensions on the next statewide ballot. In the meantime, pension costs will increasingly crowd out vital education and social services funding in Illinois' budget.
Mark Evenson of Palatine, IL
All our legislators need to do to right this wrong is stand up to the powerful union lobby to place a new constitutional question regarding pensions on the next statewide ballot.
And all the voters needed to do was:
01) Not for any office holder who was not willing to fire and privatize the vast majority of the public sector. There is no reason teaching, police, and fire protection cannot be 100% privatized thus getting rid of pension obligations and thus freezing the ability to accrue new benefits.
02) Vote out any school board member who are not actively seeking to replace all classroom lead instruction with virtual classrooms thus eliminating the teachers and with them pension and healthcare obligations.
03) Vote out all judges and the legislature, county board, aldermen, township etc after one term thus eliminating the pension and health care obligations.
The above has been 100% under voter control essentially forever. It simply comes down to lazy, pathetic voters.
Why do you expect legislators, who essentially are corrupt, lazy, worthless individuals to do the job the voters are too lazy to do in the first place?
Here’s the problem with the analysis. The increased contributions are the result of skipping payments, thereby losing interest earnings, which are the third component of the funding mechanism that worked well until the government failed to fund. Now, the state law is requiring funding at 90 percent, requiring a difficult ramp up. All money should be paid back with interest and then let’s talk. 68 percent funding was fine and 90 percent is unnecessary.
The secondary point to this debate is the fact that there is now a Tier II pension system that will fix the problems going forward. It will take a while but it will work.
We have too many taxing bodies in Illinois. Every taxing body has a heavy layer of expensive administrators. Reducing taxing bodies will reduce number of administrators.
Love Saves Lives
Should anyone wish to access the detail figures taken from TRS’s CAFR’s here is the link: https://docs.google.com/spreadsheets/d/1DEYYeNLg3eYoVhnd3GHrnK5hCaR2XX_lRUNn3xnOtbs/edit?usp=sharing