* Ty Fahner and the Civic Committee of the Commercial Club of Chicago have sent a memo to their members claiming that the pension funding problem is “unfixable”…
The magnitude of the unfunded obligations, combined with a total lack of political courage to rectify the situation, leads us to believe that our pensions systems can no longer be salvaged sufficiently to meet their current obligations
* The big business types at the Civic Committee were clearly upset with last Tuesday’s election results…
It was the Commercial Club’s hope that the November elections would bring much-needed change to our legislature and remove those from office who have been roadblocks to pension reform. Instead, it appears we will soon have even more legislators who aren’t prepared, or willing, to make the tough decisions necessary to save our state.
* Greg Hinz rounds up the Civic Committee’s reform demands…
Eliminate all cost-of-living increases for retirees or future retirees, cap pensions to a maximum salary, increase the retirement age to 67 and shift the cost of teacher pensions to local school districts over a 12-year period. The state now pays all teacher pensions except in Chicago, where city taxpayers pick up the tab. […]
Implementing the four changes the committee wants would buy the pension systems about 10 to 12 years more of viable life, he said. But the State Employee Retirement System, now projected to run out of cash in 2029, still would be insolvent by around 2040, he said. The same would apply to the State University Retirement System and the Teacher Retirement System, now projected to be unable to pay full benefits in 2030 and 2033, respectively.
Why then should lawmakers take a tough vote that won’t solve the problem?
Because if they don’t, the state will have to boost the share of its operating budget that goes toward pensions from roughly 20 percent now to 30 percent, and/or raise taxes again by a huge amount, Mr. Fahner said. That would crowd out money needed for schools, roads, public safety, health care and other needs.
But, according to Hinz, the Civic Committee refuses to release its actuarial numbers that this scenario is based on until legislative leaders disclose theirs.
*** UPDATE *** AFSCME…
Millionaire CEOs want to slash the modest retirement savings earned by middle-class public servants like teachers, police, nurses and caregivers. Regrettably, that’s not news. But it is disappointing that the Civic Committee’s letter to the governor is alarmingly fact-free: No mention that the pension debt was mostly caused by politicians who skipped required payments even as public employees always paid their share. No mention that retirees rely on an average pension of just $32,000 a year, with nearly 80% not eligible for Social Security.
But Illinois residents reject these false attacks. Last week they defeated a change to the Illinois Constitution meant to pin the blame for the pension problem on workers and retirees. And a recent statewide newspaper poll found that voters rightly fault politicians, not workers, by a margin of 51 to 2.
Like all public employees, AFSCME members are helpers and problem solvers by trade, and we remain ready to help solve the pension funding problem. But that’s going to require everyone to work together.
Along with our partners in the We Are One Illinois coalition of unions that represent public employees, we have proposed a pension funding framework that would guarantee politicians pay their share going forward, never repeating the mistakes of the past. It would protect retirees from changes while offering that active employees would make increased contributions to help pay down the debt. And crucially, it would end tax giveaways for big, profitable corporations, helping Illinois to end its practice of using public retirement systems as a credit card to fund vital public services. This last imperative explains the agenda of the CEO crowd: They want to protect their special treatment in the tax code at all costs—even if that means picking the pockets of retired teachers, fire fighters, child protection workers and other public servants.