I was asked by Randy Wieck of the Kentucky Teacher Retirement Legal Fund to write a brief history of Illinois’ public pension battle, published on their Facebook page: https://www.facebook.com/permalink.php?story_fbid=2583633375065710&id=597407450354989
National education blogger FRED KLONSKY, retired from Illinois public education, and long a hardened warrior in the public education, pension-plunder battle – responds to TRELF’s invitation to relate Illinois’ teachers’ pension destruction, VERY similar to Kentucky’s. There is a pattern here.
FRED KLONSKY RELATES:
For decades Illinois politicians have failed to make the annual required contributions to the state’s pension systems. Hamstrung by constitutional limits on revenue sources, they took the path of least resistance by paying for services and for their “pet projects” without raising taxes and by pension underfunding. In 1995 they invented a flawed re-funding schedule, a funding ramp that only made matters worse. They refused to re-amortize the pension systems’ unfunded liabilities. Favoring corporate interests rather than the interests of retirees or the state’s over-taxed working families, the unfunded liability has continued to grow. It now has climbed to $130,000,000,000, with no end in sight. Seventy cents on the dollar goes to interest on the debt.
In 2013, Democratic Governor Pat Quinn and the Democratic controlled General Assembly passed a bill cutting benefits to current and future state employees. Illinois passed a pension reform bill which reduced retiree cost of living increases, raised the retirement age, limited pensionable salaries, lowered the amounts current employees contributed and set up a voluntary defined contribution alternative to the defined benefit system in place at the time.
The bill was a clear, illegal modification of Article XIII, Section 5 of the Illinois Constitution, enacted in 1970. The state constitution included a clause which EXPLICITLY protected the pensions from any attempt to “diminish or impair” the benefits. The record of the discussion of delegates to the Constitutional Convention in 1970 also made it clear that delegates anticipated future attempts to cut pension benefits and included the clause to prevent it.
In 2015 the Illinois Supreme Court ruled that a unilateral change to the contractual and constitutionally protected state pension benefits was unlawful.
However, the pension protection clause does not prevent legislators from changing the contract of future state employees, including teachers. In 2010, that is what the legislature did. Any state employee hired after January 1, 2011 was placed in a Tier 2, which reduced benefits and raised the retirement age.
The good news and bad news for Illinois public school teachers and state employees is that while current members of Tier 1 have their current and future benefits constitutionally protected – Illinois is one of just a few states that has that constitutional protection – there is no constitutional requirement that the pension systems are adequately funded.
This year the legislature once again fell $2.7 billion short of full funding.
-FRED KLONSKY, NATIONAL ED BLOGGER AND RETIRED ILLINOIS PUBLIC SCHOOL TEACHER, AND UNION LEADER