BGA panel: State’s pension problems now a priority

Reps say work on solutions could begin when legislators return to Springfield next week.

April 10, 2012

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WBEZ/Michael Puente
Ill. State Rep. Darlene Senger (R-Naperville) (from left), Henry Bayer, executive director of AFSCME Council 31, Ty Fahner, president of the Civic Committee of the Commercial Club, Ill. State Rep. Elaine Nekrtiz participate in a panel sponsored by the Better Government Association.

When Illinois lawmakers return to Springfield next Tuesday, they’ll have a tall order on their hands:  fixing a state employee pension system that’s up to its knees in obligations the state can’t easily pay.

A House committee tasked with looking for solutions has been meeting in Chicago and at the statehouse for several weeks. They’re trying to shore up the system that, by most accounts, is under-funded to the tune of $80 billion.
Illinois Legislators have sidestepped the problem for years, but several who attended a panel Monday evening said the time for talking is at its end. Rep. Darlene Senger (R-Naperville) attended the event, which was sponsored by the Better Government Association, a public policy watchdog group.

“We honestly, given particularly this year, have to get something done. That’s the bottom line,” Senger said. “We can go through these back and forth opinions, but we have to get something done. And, you know what, I think we have the tools to do it. I think it’s just a matter of sitting down and figuring out what’s best for the state of Illinois.”

The BGA conducted the panel discussion at Loyola University’s downtown Chicago campus. The group’s president, Andy Shaw, said to solve the pension problem, the public should educate itself about the extent of the problem.

“Informing them that it’s all of our problems, that just because you’re not a public employee, you have a son or a daughter or a grandson or granddaughter who will not get a proper education if too many of their education dollars have to be diverted to pension costs,” Shaw said.

Most of the four-member panel agreed that all options to fix the problem are on the table such as: reducing benefits, increasing the retirement age for state employees holding the line on cost of living adjustments (COLA) or having public school districts and public universities pick up the tap for teacher pensions.

But panel member Henry Bayer, executive director of AFSCME (American Federation of State, County and Municipal Employees) Council 31, said he  doesn’t support those options.

“If we’re going to address the problem over the long haul, then we’ve got to address the whole problem,” Bayer said. “The basis of the problem was a failure to put in sufficient funds in the past. We want to make sure we put a system in place so that it cannot happen again.”

Ty Fahner, president of the Civic Committee of The Commercial Club, agrees that reform should not come at the expense of union members because, “they kept their part of the bargain.”

“But there has to be a solution that involves … shared sacrifice,” Fahner said. “Why should the public pensions share the problem? Because 95 percent of us that are not in the public pension union, we don’t get the pension, we don’t pay in, but we have to pay those pensions and we have to pay the $80 billion that has to be advertised and paid. We’re all stakeholders.”

Panelist and State Rep. Elaine Nekrtiz (D-Northbrook), who sits on the six-member House committee on pension reform, says the scope of the pension debt is tough to grasp.

Nekrtiz says the state will put $6 billion into the pension system on July 1st,, the start of next fiscal year for the state.

That $6 billion will be paid out of the state’s $33 billion general revenue fund, she says, which doesn’t even match the $6.4 billion dollars in interest generated for the cost to finance the $80 billion dollar unfunded pension liability.

“If we are in the General Assembly are to really to pay the full cost of those pensions, we’re looking at the $8 to 9 billion range. How we do that without eating into other obligations that the state has is beyond me,” Nekrtiz said. “We can’t even pay the interest on the unfunded liability right now.”

Nekritz says finding where to cut is made more difficult given the fact the state is already trying to figure out how to cut Nearly $3 billion dollars to its Medicaid program.

The bottom line, Nekrtiz says, is that no one strategy is going to fix the pension debt.

“We don’t have one item that is going to solve the whole thing. We’re going to have to … choose from a menu of options and several items on that menu,” Nekritz said.