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Editorial: Change pensions for current state workers

Updated: September 24, 2012 6:25AM

Illinois is dead last. Again.

A new report out this week says Illinois is in last place among states when it comes to putting away enough money for benefits promised to its employees in retirement.

Illinois had just 51 percent of the $126 billion it needed in 2008-2009 to pay promised pensions, according to the Pew Center on the States. This was the largest shortfall in the nation, as Illinois’ was in the previous year.

Few dispute the main factor driving this shortfall: the state’s repeated and prolonged failure to contribute what it owes to its pension systems. Meanwhile, state employees and teachers have faithfully kicked in their share paycheck after paycheck.

This is profoundly unfair, and public employees have every right to scream that from the rooftops.

But that doesn’t change the reality Illinois now faces: The state’s annual pension bills, along with accumulated debt, are so high they will soon gobble up resources needed for core state functions, including educating our kids, treating the sick and staffing our prisons.

Take the recent income tax increase, which is expected to generate an additional $6 billion a year. The state’s pension bill for next year, plus debt service on borrowing to pay recent pension bills, totals $6.2 billion.

Ouch. It is time for Illinois to tackle its pension problem.

The General Assembly got started last year by dramatically reducing pension benefits for new public employees. But that does little to reduce the state’s $84 billion pension liability, leaving no choice but to keep plugging away at pension reform.

This means changing the pensions of current employees. Not the retirement benefits already accrued, but changing benefits going forward.

Whether such a change is allowed under the Illinois Constitution is a matter of great debate, with skilled lawyers on both sides making their cases. No one disputes language in the Constitution that prohibits the diminishment of benefits, but which changes actually would cross that line is unresolved. It’s time to answer that question. Legislators should move on reform and let the courts ultimately decide the constitutional question.

House Minority Leader Tom Cross has proposed a bill to dramatically reduce non-vested benefits for current workers. The bill would let them stay in the current benefit system but only by significantly increasing their contributions. Alternatively, they could move to a 401(k)-style plan or accept the lesser benefits now given to new state employees.

Cross is right to get the ball rolling, but his bill goes too far. In a sweeping way, it breaks promises made to state employees and wipes away the prospect of a modest, decent retirement.

That said, nibbling at the edges won’t cut it.

We’d like to see legislation emerge from Springfield — or, better yet, emerge from the negotiating table with public employee unions — that is tightly focused on twin goals of limiting the pain inflicted on state employees and passing constitutional muster.

Two good places to start: Raising the amount employees contribute toward their pensions and/or raising the retirement age. Workers closest to retirement should be exempt.

The unions consider both efforts wrong, unfair and unconstitutional. They are intent on fighting to the bitter end. But these changes are less onerous and fairer than those proposed by Cross. And, at the negotiating table, the unions would have a mediating influence on the final product.

Something has got to give, and now is the time for all sides, particularly Gov. Quinn, to make it happen.

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