Editorial: Quinn’s pension reforms will defuse time bomb
Monday, April 23, 2012
A group of mature adults is finally running the State of Illinois.
Leading the way is Gov. Pat Quinn, who last week spoke candidly and directly about the state’s dire financial straits and then laid out game-changing proposals to save Illinois’ Medicaid and pensions systems from collapse.
On Friday, we backed Quinn’s Medicaid proposal, and today we strongly endorse the broad contours of his plan to rein in state employee pension costs. The basic elements were drafted by a bipartisan legislative working group.
We take no pleasure in backing a plan that cuts benefits for teachers and prison guards — they’ve faithfully paid toward their pensions year after year while the state has not. But without changes of the magnitude envisioned by Quinn, before too long there may be no pension systems to reform.
Illinois is facing a ticking time bomb. The state’s pension systems are only 43 percent funded, leaving an $83 billion pension liability that is crowding out spending on the most basic services, including schools, human services and prisons. This year, the state paid $5.7 billion toward pensions, including debt service, consuming 17 percent of state spending. By 2017, that will reach $7.8 billion, or 21 percent of state spending, according to the Civic Federation.
To lower costs, Quinn wants teachers and state employees to retire later, at 67, and to accept lower annual cost of living increases in retirement. They’ll also contribute 3 percent more of their salaries toward their pensions. The state would set a 30-year timetable to reach full pension funding and would use a more sound system of calculating what it owes each year.
In return, Quinn says the state will pay its share every year. An ironclad guarantee isn’t possible, but as they translate this plan into a bill, legislators should get as close as humanly possible.
To avoid running afoul of the Illinois Constitution, which says pension benefits “shall not be diminished,” Quinn wants to offer public employes a choice if they reject his plan: keep current benefits but give up free health care in retirement and accept that pay raises over time won’t be factored into final pension benefit calculations. We worry about the legality of excluding raises and urge legislators to triple-check that as they draft legislation that inevitably will be challenged in court.
Quinn also proposes making school districts, community colleges and universities pay a small part of the cost of their employees’ pensions. Most pay nothing now. The Republican leadership rejects this, saying it would force school districts to raise property taxes. We don’t buy that, given the small amount districts would be asked to pay. But Quinn is wise to separate this issue from his larger plan.
Many details remain unresolved, as they should be. This leaves room for state unions, which strongly reject Quinn’s proposal, to help shape it and to make sure legislators get this just right.
Illinois Republicans, to their credit, have been pushing for these changes for years. And Quinn, to his credit, is the leader stepping up to say the moment is now.
Legislators typically avoid anything risky or bold in an election year. But this year, that could prove to be the real political risk.