How pension mess could get worse
By EDEN MARTIN August 21, 2013 10:12PM
Here’s what our Illinois Constitution — Article XIII, Section 5 — has to say about pensions:
“Membership in any pension or retirement system of the State, any unit of local government or school district … shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”
Does this mean “any” pension system of “any” city or county, like Chicago or Cook County?
Sure. Chicago, including the Chicago Park District and the CTA. Also Cook County, the Forest Preserve District. Same with other cities, towns and counties all over Illinois.
And the “benefits” of these pensions “shall not be diminished.” Do you think the framers were referring to the pension payments?
But it says “membership” in a retirement plan “shall be” the enforceable contract. That surely means that the member has a contract claim against the pension plan. Where does it say the member has a claim against the State of Illinois?
Now you’re quibbling again. We’ll stop that after we pass the current Cullerton/union “pension reform” proposal, which says the state will “guarantee” funding — take on a contractual obligation to pay into the pension systems whatever is needed.
You mean the State of Illinois would then be on the hook for local teachers’ pensions all over the state?
Sure, why not. The total unfunded obligation for the state plans is now only about $100 billion.
Chicago teachers too? That’s another $5.5 billion?
Sure — that would be the next step. If Illinois is on the hook for Peoria’s teachers, why not Chicago’s?
Police and fire too? All over the state?
Well, that’s a little trickier. But if Illinois is going to be responsible for the pensions of local teachers, why not the police and firefighters? Why not streets and sanitation? Why not Cook County employees? Don’t they deserve protection the same as teachers? After all, the state constitution says: “any pension system … of any unit of local government.”
And such a guarantee would cover not only the pensions that folks would receive if they retired today, but whatever the pensions might be increased to tomorrow? Suppose Peoria — or Chicago — drives up pensions by increasing the career-end salaries of local officials or teachers. Or suppose COLAs get sweetened. Or unused vacation days get treated as salary. There are a 100 ways — maybe thousands — for the pensions to be fattened.
That’s the beauty of the proposed guarantee. The entire state will be the guarantor, not just the pension plan or the former employer. And the guarantee won’t be at the level of pensions as they are today. It will be at whatever level they get raised to in the future. If assets owned by the plans go down in value, the unfunded liabilities guaranteed by the state will go up even more.
What’s even better — no future legislature will be able to reverse the guarantee because the “reform” bill makes it subject to the “no impairment of contracts” clause.
So “not be diminished” means “can’t be prevented from going up … and up… and up”? And poor, broke Illinois would be on the hook for it all?
As President Lincoln once said, “I laugh because I must not cry. That is all.”