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Rush to Weaken Illinois’ Pension System Unwise

by Clyde Weiss  |  January 04, 2013

Rush to Weaken Illinois’ Pension System Unwise Demonstrators fill the Illinois state Capitol in Springfield on Thursday to protest plans to undermine the retirement security of public service workers. (Photo by Chuck Stout)

If Illinois Gov. Pat Quinn was serious about making the state’s pension system sustainable, he would back off his push to get the Legislature to pass something before this month’s lame-duck session ends. But, unfortunately, that doesn’t seem to be the case.

As The New York Times reported this week, “The showdown is certain to ignite regional tensions over the way the pensions of public schoolteachers outside of Chicago are paid for, and could run up against legal barriers with a state Constitution that limits how pensions can be changed in the first place.”

Quinn's proposal would change the way the annual cost-of-living adjustment is calculated, drastically reducing pension values over time.

Thousands of active and retired public service workers, including members of AFSCME Council 31, are demonstrating their opposition to this assault on retirement security during two “Action Days” at the state Capitol, yesterday and today. 

AFSCME, which is also a leading member of the National Public Pension Coalition, has long maintained that undermining public pension systems to fix a state’s economic troubles is not only unnecessary, but misses the target. It’s not pensions that caused those troubles in the first place, but a lack of revenues – especially from corporations that take advantage of tax loopholes, and the wealthy who have not paid their fair share of taxes. Read more about the myths of public employee pensions here.

Let’s look at just a few facts, from the We Are One Illinois coalition, of which AFSCME Council 31 is a member.

  • For decades, Illinois politicians shorted or skipped the employer contributions required by law, creating the nation’s largest pension debt. All that time, public employees paid their fair share. It’s wrong to punish public employees for the actions – or inaction – of irresponsible politicians.
  • A public employee’s pension is his or her own life savings – they typically contribute 8 percent, 9 percent or more from each paycheck to their pension fund. Illinois public employees have always paid their share, faithfully and in full.
  • Most Illinois public employees are ineligible for Social Security. Unlike every private-sector worker in America, police and firefighters, teachers and university employees, city of Chicago and Cook County employees don’t qualify for Social Security. Reducing the pension they earn would leave many public employees with little to fall back on in retirement.
  • Illinois public employees retire on very modest pensions—on average just $32,000 a year after a career dedicated to public service. Many receive much less than this average amount.
  • The Illinois Constitution states that membership in a public pension system is an enforceable contractual relationship, “the benefits of which may not be diminished or impaired.” Legislation violating this constitutional protection will cause a costly and wasteful court challenge.

Henry Bayer, AFSCME Council 31’s executive director and an AFSCME International vice president, told The New York Times, “There’s no reason to rush into this, and on the contrary, you want to be deliberate.” That’s the right course for something as serious as the retirement security of dedicated public service workers, including firefighters and police, teachers and nurses, child protection workers and disability caregivers.

AFSCME and the We Are One Illinois coalition have evaluated an alternative pension reform plan by a bipartisan group of state legislators and found that, by gutting the cost of living adjustment provision that protects retirees from rising costs, it would cut workers’ already modest pensions by nearly a third.

Instead, the coalition offered its own framework for a fair and constitutional solution to the pension funding problem. It would provide an ironclad guarantee that state government could not skip its pension payments in the future; close wasteful corporate tax loopholes worth $2 billion a year, enabling politicians to stop using the retirement funds as a credit card; and offer that if the first two conditions are met, active employees could contribute an additional 2 percentage points of their salary to help close the shortfall.

We Are One Illinois has called for a mid-January summit meeting between labor and legislators to discuss the coalition’s framework. We suggest that the governor and lawmakers back off their schemes now and accept labor’s offer to engage in a deliberative process that solves the pension funding problem fairly.

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