Public pension reforms move in right direction

Tuesday, March 30, 2010

Do the public pension reforms recently approved by the General Assembly go far enough? No.
Will these pension reforms do anything to solve the state’s current financial problems? Not really.
Were the reforms worth enacting, despite the answers to the questions above? You bet.
The state has to start somewhere. And, while the changes enacted for new hires fall short of what’s needed and don’t solve immediate problems, they are a start. At least lawmakers are no longer immobilized on square one.
If similar changes had been enacted 10 or even five years ago, we would be better off today.
The Commission on Government Forecasting and Accountability estimates that the changes would save the state about $119 billion over the next 35 years.
The changes would apply to lawmakers and judges, too — but not those currently in office.
Besides helping to bring future pensions more in line with private sector retirement benefits, passage of Senate Bill 1946 demonstrates that it is possible to get bipartisan agreement on pension changes.
In the House, 60 Democrats and 32 Republicans voted for the bill. In the Senate, 32 Democrats and 16 Republicans voted in favor.
It is important for Gov. Pat Quinn to sign the bill quickly and not cave in to pressure from unions, who oppose a two-tiered pension plan.
Then, it is important to enact more reforms, such as moving to defined contribution/401(k)-style plans that are more common in the private sector, rather than a defined benefit pension plan. But first, let’s take stock of what SB 1946 does.
It increases the age for retirement with full benefits to 67. It caps the level on which pension benefits are based at $106,800, which will reduce pension benefits to public employees in the highest-paying posts. And it prohibits public employees from collecting a pension from one government while also collecting a salary from another.
Unfortunately, the legislation also allows the Chicago school system to take a break from teacher pension payments — a provision that triggered “no” votes from some lawmakers, such as Rep. Dan Brady, R-Bloomington.
However, the overall benefits of this bill outweigh its shortcomings.
Although state Rep. Bill Mitchell, R-Forsyth, joined Dan Brady in voting against the plan, state Sen. Bill Brady, R-Bloomington, and state Reps. Shane Cultra, R-Onarga, and Keith Sommer, R-Morton, voted for it. State Sen. Dan Rutherford, R-Chenoa, did not vote on the measure, but said he would have voted “yes” if he had been there when the vote took place.
Illinois still has the largest unfunded public pension liability among the states — an estimated $77 billion to $90 billion. But at least it’s moving in the right direction — if Quinn signs the bill and if it isn’t used as an excuse to fall further behind.