Pension System Changes Needed Now

The pension mess is clearly an impediment to the operation of our state and calls for action immediately. The cause of the 97 billion dollar hole and current 5 billion dollar annual price tag which continues to grow is multi faceted ranging from countless failures of the state to pay what was due each year to the economic downturn that reduced the returns on investments and actions both in Springfield and locally that spiked the benefits to unreasonable levels for some.

Failure to act will deprive the state of the ability to act on other challenges facing our state and puts in jeopardy the ability of individuals to be able to actually and timely receive pension benefits they earned and are entitled to in addition to the continued downgrading of the states credit ratings which will cost the state even more money when it needs to secure funds for needed projects. The needed action must meet constitutional muster since under the Illinois Constitution, public pension benefits cannot be diminished or impaired. A reasonable legal interpretation of said language would seem to mean that you cannot take away benefits that have been earned up to this point in time and the expectation to receive those benefits.

It would seem to be reasonable however that prospectively, if changes are made to the system, that you are not diminishing or impairing those constitutional rights. Consequently proposals to increase the amount that employees need to pay in prospectively seems fair as long as amounts are reasonable and phased in as do proposals to prospectively decrease the amount of automatic increases each year. This must be tempered by the fact most public employees cannot get social security or even survivors benefits if a spouse is deceased.

The Nekritz Bliss bill on contributions and COLAs appears to be reasonable and fair since the increased contribution is phased coupled with requirement that state must pay its annual share. Likewise the proposed decrease to Colas would only start after the first $25000 and delay colas until an employee is 67 or retired five years whichever is first.

The proposed change in retirement age appears reasonable and fair, but for existing employees, may be more problematic since that might be interpreted as an impairment of benefits since current employees a have an expectation that they will be able to start to get their earned benefits at a particular age. Others might argue that is not impairing the actual benefits but merely delaying receipt of the benefits.

In light of the potential age delay interpretation along with the fact of no social security or survivor benefits, allowing the retirement age to stand for existing employees gives a little more time to build up savings to help offset the social security disadvantage. I would therefore think it best to delete the age change.

I am hopeful that action will be taken immediately to begin to tackle this vexing pension albatoss to our state. Action similarly is needed on pension reform for the employees for which local governments must pay the pension bill thru taxes or service cuttbacks despite the pension sweeteners and controls which are decided in Springfield.

Delaying action on any shift of the pension burden appears to be a smart idea since the complexity of that idea and potential harm to local real estate taxes needs to be carefully balanced with compensatory relief to our schools and cannot be rushed. Moreover there is another constitutional guideline which needs to be kept mind, namely the requirement of that the state has the primary responsibility for financing the system of public education. A shift can be discussed more effectively and fairly in tandem with what the State is prepared to do on educational funding.

Elliott Hartstein

Former Buffalo Grove Mayor and Former Stevenson High School Board member