Responding to Crain’s: “Illinois policymakers have favored corporate interests.”

Glen Brown

A response from Glen Brown to Crain’s Chicago Business.

We are tired of skewed coverage regarding so-called pension reform, and we are tired of the media’s omission of the most significant facts about public pension debt and anyone who talks or writes about “spending money on pensions overtakes spending on children’s education,” or the state’s bond ratings, cuts to services, and the siphoning of the state’s money from public safety and human services because of “failed pension reform.”

Every editorial, every article and interview, and every legislative session about Illinois public pension reform should begin with these statements:

The public pension systems were not and are still not the cause of the state’s budget deficits. The state’s budget deficits were triggered by past policymakers’ corruption, arrogance and irresponsibility and are currently perpetuated by some members of this General Assembly. The state’s pension debt and revenue problems need to become the emphasis. Why?

Because Illinois policymakers have consistently failed to make the annual required contributions to the state’s pension systems, primarily because they could pay for services and their “pet projects” without raising taxes and, in 1995, policymakers created a flawed re-funding schedule and have refused to correctly amortize the pension systems’ unfunded liabilities since then.

Instead, Illinois policymakers have favored corporate interests rather than the interests of their citizenry and; thus, they continue to sabotage the public employees’ retirement plans and the State of Illinois’ future economic solvency through mismanagement and fiscal irresponsibility.

Illinois policymakers left us with a fiscal disaster, and so-called “pension reform” (or breaking a constitutional contract) will never resolve today’s $135+ billion unfunded liability. Had Illinois legislators paid into the pension systems throughout the years, we might actually be realizing pension savings.

5 thoughts on “Responding to Crain’s: “Illinois policymakers have favored corporate interests.”

  1. Nearly 80% of the pension payments are for the interest on the debt (the unfunded liability) created by the General Assembly for not fully funding the Teachers’ Retirement System since its inception in 1939.

  2. Remember: the Illinois Supreme Court explicitly stated in 2015: “The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible. Moreover, no possible claim can be made that no less drastic measures were available when balancing pension obligations with other State expenditures became problematic. One alternative, identified at the hearing on Public Act 98-599, would have been to adopt a new schedule for amortizing the unfunded liabilities. The General Assembly could also have sought additional tax revenue. While it did pass a temporary income tax increase, it allowed the increased rate to lapse to a lower rate even as pension funding was being debated and litigated. That the State did not select the least drastic means of addressing its financial difficulties is reinforced by the legislative history…” (Doris Heaton et al., Appellees, v. Pat Quinn, Governor, State of Illinois, et al., Appellants) Opinion filed May 8, 2015).

  3. Regarding the so-called pension ramp of 1995:

    “‘The Statutory Funding Plan’s contribution schedule increased the unfunded liability, underfunded the State’s pension obligations, and deferred pension funding. The resulting underfunding of the pension systems (Structural Underfunding) enabled the State to shift the burden associated with its pension costs to the future and, as a result, created significant financial stress and risks for the State.’ SEC order, at 3. That the funding plan would operate in this way did not catch the State off guard. In entering a cease-and-desist order against the State in connection with misrepresentations made by the State with respect to bonds sold to help cover pension expenses, the SEC noted that the State understood the adverse implications of its strategy for the State-funded pension systems and for the financial health of the State. Id. at 10. According to the SEC, the amount of the increase in the State’s unfunded liability over the period between 1996 and 2010 was $57 billion. Id. at 4.5 The SEC order found that ‘[t]he State’s insufficient contributions under the Statutory Funding Plan were the primary driver of this increase, outweighing other causal factors, such as market performance and changes in benefits.’” (Emphasis added.) Id. at 4 (In re PENSION REFORM LITIGATION (Doris Heaton et al., Appellees, v. Pat Quinn, Governor, State of Illinois, et al., Appellants) Opinion filed May 8, 2015, JUSTICE KARMEIER delivered the judgment of the court, with opinion. Chief Justice Garman and Justices Freeman, Thomas, Kilbride, Burke, and Theis concurred in the judgment and opinion).

  4. As USUAL GLEN YOU HAVE MADE IT EASY TO UNDERSTAND THE PENSION ISSUE AND THE FAILURE OF THE STATE TO TRY AND ATTACK THE ISSUE APPROPRIATELY. GET RID OF THE DEBT CREATED BY PAST AND PRESENT LEGISLATURES AND THE PENSION ISSUE BECOMES A NON-ISSUE.

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