Sharing the history of Illinois’ pension fight with teachers in Kentucky. We need a national strategy.

Piggybank-cracked-pensions

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

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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

6 thoughts on “Sharing the history of Illinois’ pension fight with teachers in Kentucky. We need a national strategy.

  1. Under separation of powers doctrine, courts can not tell legislators how to spend or appropriate money. Public employee unions have had a major voice in electing both legislators and judges. Both are predominantly Democratic in political leanings. Why do they work at cross-purposes?

    I’m not suggesting that public employee unions are responsible for the outcome that you describe. Nor am I suggesting that judges let politics enter into their decisions. Legislators respond to advocacy that carries a powerful social message. Judges respond to advocacy that is legally persuasive.

    I think the problem is advocacy itself. It is intrinsically one-sided. A prosecutor does not try to prove the defendant is innocent. Klonsky advocates for higher teacher salaries (leading to higher teacher pensions) and for better funding of pension trusts. In some ways, higher salaries use resources that could otherwise fund pensions. The predictable solution is more revenues thus higher taxes.

    Assuming that tax revenue is a finite resource, and knowing that legislators have many other “claims” on those resources, it stands to reason that not all “obligations” will be honored. One can argue that revenues, while theoretically finite, have not been sufficiently tapped. One can also argue that a promise is a promise and it must be kept at all costs. An advocate would be expected to make both arguments. Thus far, in Illinois, you seem to be winning the legal argument. Results-wise, you are losing the political argument because the funding ratio is declining. At least that’s how I see it.

    The “government” will continue to need teachers more than retired teachers. So my prediction is the pension trusts will be depleted. Maybe in 10 years maybe in fewer. Detroit ended up in bankruptcy with pension haircuts. Many say that the haircuts weren’t large enough and that the city will need another bankruptcy in a few years.

    Is there a sensible and orderly solution to this? I expect you have decided that there’ll be a better end result via continued (often strident) advocacy. I’ll check back in a few years.

  2. Logic would indicate that you support the “no holds barred” approach vis a vis Trump and the House? Or the 2016 & 2020 election strategies? I see reason not to, even though it spawns folks like Hannity and Maddow.

    The American political and legal systems thrive on the adversary system … not to mention the legislators and the lawyers. The first day of law school my prof summed it up: “you don’t make me mad when you sue my client.”

    You are a pragmatic sketch artist who found a “better way” than print journalism. You should run for office and in a few years you’ll get another pension. Although that would be less fun than what you’re doing now!

    1. I’m not interested in collecting more pensions. I’m just interested in public employees receiving what we were contractually and constitutionally guaranteed. Surely as a lawyer you believe in contracts and the constitution.

      1. I don’t know what you mean when you say “believe in.” Lawyers take an oath to uphold the law and the state and federal constitutions. Parties to contracts “default” and parties who can’t meet their obligations file for bankruptcy. Courts can throw out contracts that are unconscionable or impossible to perform. Bankruptcy courts can modify contracts. They did in Detroit and they may have to again. Retired public employees got a minor pension haircut and a substantial health benefit haircut. GM employees got haircuts. It looks likely that Teamster retirees will get haircuts. Down the road social security recipients are likely to get haircuts. You will fight against and deplore haircuts. Fair enough. Not much point in debating it. Que sera sera.

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