Reed: Is Illinois finally ready to act on pension crisis?

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Updated: March 18, 2012 8:04AM

Long after the state’s public pension alarm began to blare, Illinois’ leadership appears to be finally roused and ready to answer the call.

Maybe.

This year, we’ll see how determined our leaders are as they launch various efforts to comprehensively fix the state’s five pension systems that are facing long-range financial ruin and may plummet the state government into insolvency.

The Better Government Association is also encouraged by recent legislative crackdowns on individual pension abuses that have been uncovered in exposes by the BGA and media outlets. But it’s high time that our leaders toughen up and hammer out systemic remedies.

Democratic and Republican powerhouses are ramping up for this legislative session.

Having avoided aggressive pension reform for most of his tenure, Gov. Pat Quinn says he’s now raring to go. Recently, Quinn forged a bipartisan working group of lawmakers and others to embark on a comprehensive examination of the state pension crisis. Quinn’s goal: Prescribe remedies that the governor says can be accomplished in a “fair and constitutional manner.”

Meanwhile, House Speaker Michael Madigan (D-Chicago) is interested in the way pensions invest retirees’ money. He’s convened a special House committee to examine the major funds’ financial strategies. His goal: Determine how decisions are being made and how much risk these portfolios carry, especially in today’s choppy economic seas.

House Minority Leader Tom Cross (R-Oswego) is again gearing up proposed legislation that would alter the benefit structure for current state workers. Cross’ goal: Pass a law that protects benefits already accrued but reduce them going forward either by having employees pay more into a defined-benefit plan like a pension or opt for a defined-contribution plan, such as a 401(k).

It’s encouraging to see state leaders address the larger pension issues and take a wider view. That direction is a welcome departure from the recent past when the crisis has been ignored or when lawmakers settled for passing incremental reforms — usually after the BGA and media reports uncover embarrassing abuses of the current system that make taxpayers’ blood boil.

For example, lawmakers last session outlawed the egregious practice that allowed two education lobbyists, who were each substitute teachers for merely one day, to become eligible for hefty public pensions.

Such repairs provide necessary but limited relief, but they are not the real answer to this systemic quandary. We need solutions that match the size and scope of this crisis.

Here are some issues that the BGA would like to see addressed in the spring legislative session: Suspending or limiting cost-of-living adjustments; capping the amount of money a retiree receives (as is done in the private sector) no matter how many public pension plans they have been in; prohibiting “back-loading” or “spiking” by ending the suspicious practice of state employees getting last-minute promotions or salary increases that translate into heftier pension payouts; and phasing out defined-benefit pensions for defined-contribution ones.

The BGA knows there are stormy debates ahead on this highly controversial issue, especially whether changes to the pension rules for current workers is permissible under the Illinois Constitution.

Moreover, organized labor can rightly argue that the state caused this long-term pension funding crisis by not keeping its word and properly funding its pension plans.

But despite the fiscal complexity and political reality (including 2012 being an election year) that dogs this controversial issue, Illinois is on the verge of financial disaster and strong measures are needed to start turning things around.

It’s time to stop stalling. The alarm bell is clanging, and our state leaders must confront this pension-funding emergency before it’s too late.

Robert Reed is director of programming and investigations for the Better Government Association, a Chicago-based government watchdog group.