We’re about to find out just what sort of state we really live in.
Actually, we already pretty much know.
Going back as far as the 1940s, Illinois has neglected to fully fund its public employee pension plans.
The problem eventually got so bad the state’s Constitutional Convention delegates inserted an air-tight guarantee that pension benefits could never be “diminished or impaired.” The brand new Constitution was approved by voters in 1970. Illinoisans were officially informed that the pension clause was “self explanatory.”
The idea was to scare legislators and the governor into fully funding the pension systems and prevent them from expanding already unaffordable benefits.
The Constitutional Convention delegates wanted to specifically warn the state’s powers that be that they’d never be able to one day turn around and decide that not enough was paid into the funds and too much was promised out of the funds, so benefits had to be cut.
It didn’t work.
The pension funds were never given enough state money. Benefits were expanded almost every year, sometimes more than once.
And then just last week the General Assembly approved and the governor signed into law a bill that did exactly what the Constitutional Convention delegates specifically tried to prevent. They reduced unaffordable, unfunded pension benefits.
Things finally got to the point where taxpayers were on the hook for $380 billion in pension fund payments over the next 30 years. The pension systems’ unfunded liability had grown to $100 billion.
Our legislators and governors had some partners in this debacle. Unions pushed hard for some very big benefit hikes, including a compounded annual 3 percent increase for all retirees that has wound up costing a fortune. If the unions had pushed half as hard to actually fund those benefit sweeteners, things might be different today.
The new law slashes benefits, particularly that annual cost-of-living adjustment. A Sun-Times editorial described it this way: “The bill kicks ordinary working people — secretaries, clerks, teachers and the like — in the teeth.”
Unbelievably, there are those who think the new law doesn’t go nearly far enough. Republican gubernatorial candidate Bruce Rauner said the law merely slaps “a small bandage on an open wound.”
Rauner would go further. He’d freeze all pension benefits where they are today. No cost-of-living adjustments ever. So, if your retirement income is now $30,000, it’ll be $30,000 15 years from now, regardless of inflation.
Rauner would also put all current workers into 401(k) plans — the same plans that most private employees participate in, and the same plans that many are now worried are so inadequate that we appear heading for a national poverty disaster among the elderly.
Rauner tried to kill the bill last week. The man who reported making $53 million last year tried his cynical best to incite class warfare and turn the less fortunate against the bad public employees and retirees. His ploy didn’t work. The bill was already so harsh that few were willing to go any further.
The court cases will begin soon, and that’s when we will discover what sort of state this is.
We’re going to soon see whether a plain language constitutional provision is enough to stop exactly the outcome that the drafters were specifically trying to prevent two score and three years ago.
I can see how some of this new might survive. There is some wiggle room, particularly on cost of living adjustments. The constitutional drafters debated whether to specifically protect benefits against the ravages of inflation and decided against it. But it couldn’t be more clear what those drafters were trying to do, and the new law sure looks a lot like it.