(The Center Square) – A member of the Illinois House Personnel and Pensions Committee suggests lawmakers may need to look at other options if they hope to resolve the state’s pension crisis.
Illinois currently spends more than $10 billion a year on public pensions, and the state’s five systems have unfunded liabilities of at least $140 billion.
House Bill 4098, which has been the focus of discussion at House Personnel and Pensions Committee hearings in recent months, would allow the Illinois Treasurer and Comptroller to transfer $500 million from the General Revenue Fund to the reduction of unfunded pension liability each fiscal year. These funds would then be used to fund state pension systems.
Committee chairwoman State Rep. Stephanie Kifowit, D-Oswego, said it’s the right way to solve the pension crisis.
“This is the first time we have had a bill that addresses Tier 2 in such depth,” Kifowit told Center Square in July. “It’s definitely momentum going in the right direction.”
Tier 2 pensions are for state employees hired after 2011. Stakeholders say the reduced number of benefits compared to Tier 1 is problematic and could run afoul of Social Security rules.
New to the House committee, state Rep. Martin McLaughlin, R-Barrington Hills, believes HB4098 goes after taxpayers instead of tackling unfunded debt.
“Twenty-eight percent of our budget now goes to pensions while most states have 8 percent,” McLaughlin said at Center Square. “What is our solution? Move level 2 to level 1 and give them even more. So our solution is to attack taxpayers’ wallets.”
Private pension plans restructured their pensions years ago, an approach that lawmakers should consider, McLaughlin said, but they won’t.
“They restructured their pensions 10 or 15 years ago. They restructured them because they knew they were going to make sure they got paid in order to maintain the solvency of the underlying company,” he said. McLaughlin said. “Public pension plans have never done this, and they will not allow this negotiation to take place. Their (pension fund stakeholders) job is to make sure we can remain solvent, and the only way that they think they can solve is by constantly taxing us. … It’s a recipe for disaster, which is why everyone is leaving the state.”
The state manages five pension funds. The Teachers’ Retirement System covers retired teachers throughout the state except Chicago.
Combined with TRS, the State University Retirement System, the State Employees’ Retirement System, the Judges’ Retirement System, and the General Assembly Retirement System have an unfunded liability of at least 140 billion dollars. They are only funded about 42% of what is needed. The legislators’ retirement system is the least well funded, at about 19 percent.