By Michael Romain
In Springfield yesterday, State Representative Greg Harris, a Democrat representing Chicago, told the Chicago Tribune that it would be “a scary vote for all of us” not long before it was announced that a pension reform bill had passed the Illinois House and Senate by margins of 62-53 and 30-24, respectively.
The bill, which Gov. Quinn is eagerly waiting to sign, will attempt to deal with a pension system that is $100 billion in the red and considered the most underfunded in the nation.
By now, it’s virtually conventional wisdom that the state’s pension debt is, as the Tribune reported, “the result of governors and lawmakers failing to set aside enough money for pensions and adding retirement perks that increased costs.” The people who most depend on the state’s pension system–namely public university workers and public school teachers outside of Chicago in places such as Maywood–are the very people least responsible for its dismal condition.
But, as union representatives have loudly claimed, those public sector employees are the ones bearing the burden of getting the system ‘fixed’. The heart of the present proposal was outlined in today’s New York Times:
“The plan’s architects said it will generate $90 billion to $100 billion in savings by curtailing cost-of-living increases for retirees, offering an optional 401(k) plan for those willing to leave the pension system, capping the salary level used to calculate pension benefits and raising the retirement age for younger workers, in some cases by five years.”
Rep. Harris’s fear is justified by the growing disdain for the bill coming from bread-and-butter interest groups on both sides of the aisle. We Are One Illinois, an advocacy group representing a labor coalition that includes the Illinois Education Association and the Illinois Federation of Teachers–key voting blocs for Democrats–has already launched a campaign to disgrace legislators who voted ‘Yes’ for the bill.
Article XII, Section 5 of the Illinois Constitution explicitly states: “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired [italics added].”
We Are One Illinois issued a statement on its website on behalf of the labor groups it represents, which read:
“This is no victory for Illinois, but a dark day for its citizens and public servants.
“Teachers, caregivers, police, and others stand to lose huge portions of their life savings because politicians chose to threaten their retirement security, rather than pass a much fairer, legal, negotiated solution in Senate Bill 2404.
“It’s bitterly ironic that, on the same day legislators used the state’s troubled finances to justify stealing the retirement savings of public servants, they approved millions of dollars in new tax giveaways for big corporations.
“A majority of legislators ignored and defied their oaths of office today—but Governor Pat Quinn doesn’t have to. He can stay true to his oath and the legal promise made to public employees and retirees by vetoing this unfair, unconstitutional bill. If he doesn’t, our union coalition will have no choice but to seek to uphold the Illinois Constitution and protect workers’ life savings through legal action.”
In addition to unleashing a potential wave of costly lawsuits and provoking the wrath of large labor groups, the bill’s bipartisan passage has also given Republican gubernatorial candidates some potential firepower to use on the campaign trail.
Despite the bill’s support by a coalition of big business interests that includes the Illinois Manufacturers Association and the Illinois Chamber of Commerce, several prospective Republican challengers stood against the bill for different reasons.
According to the Tribune, “State Treasurer Dan Rutherford said the measure failed to give workers ‘adequate consideration in exchange for altering benefits’–a stand that could help him win union endorsements.” Venture capitalist Bruce Rauner, meanwhile, prefers even steeper pension cuts and “a more far-reaching 401(k)-type approach.”
At a forum in October, before the pension committee’s final report was released, State Sen. Kimberly Lightford (D-4th) said that the proposed pension cuts are “totally wrong” and that she would only support a plan that was endorsed by the Teachers’ Retirement System. At the same event, State Sen. Don Harmon (D-39th) said that he supported the proposal’s broad parameters.
State Representatives Kathleen Willis (D-77th) and Chris Welch (D-7th), and State Sen. Harmon, all voted ‘Yes’ for the bill. State Sen. Kimberly Lightford voted ‘No.’
State Sen. Kwame Raoul (D-Chicago) told the Tribune that the bill was not a “happy” one, “it’s a compromise.” Raoul’s bitter pill-rhetoric was echoed by Rep. Welch, who conceded that the decision to vote for it was difficult, but necessary, given the state’s fiscal condition.
“Given the budgetary pressure Illinois faces, we had to pass a responsible reform that provides a sustainable solution to our pension crisis,” Welch said. “Even after drastically reducing state spending, forcing devastating cuts to programs for our most vulnerable residents, we are still lagging behind on our payments. The recommendations from the committee put us on the right track to fully fund our pension systems – freeing up critical resources to support our schools, health care and other vital services that families depend on.”
Welch noted the plan’s strengths– it “ensures the State meets its obligation to the pension systems by establishing an ironclad payment schedule to achieve 100% funding by 2044, provides a contribution guarantee to prevent the state from skipping payments”–before noting the fact that it reduces retirement benefits.
“Our action today strengthens the long-term fiscal solvency of the pension systems and bolsters the retirement security of current and future employees,” he said. VFP