If you think all is right in Illinois because we have a budget and school funding, you are sadly mistaken.
Illinois still has the worst pension debt in the nation, estimated at $130 billion, and that first budget in more than two years actually made the problem worse. Gov. Bruce Rauner and House Speaker Michael Madigan agreed to something called “smoothing,” which essentially gives the state five years to phase in increased contributions to reflect lowered — more realistic — 7 percent rates of return adopted by the pension fund boards last year.
State contributions to pension plans will decrease by $1.5 billion this fiscal year. And if you’re having trouble wrapping your head around those big numbers, consider that for every dollar you send to Springfield, not quite a quarter of it goes to pay for pensions.
The Illinois Supreme Court ruled a few years ago that just cutting retirement benefits was not a legal option, so ignoring the problem, or taking more time to deal with it, isn’t going to make it go away. Contributing less helped make Illinois the state with the largest pension debt.
State Rep. Robert Martwick, chair of the House pensions committee, said he hopes to continue working with state Rep. Mark Batinick on a bill that would offer lump-sum buyouts to vested retirees who agree, going forward, to switch from 3 percent compounded interest to simple annual cost-of-living adjustments. “It’s about trying to find as many creative ways to reduce that problem and nibble around the edges,” Martwick said.
There are some lawmakers who are succeeding at addressing some pension problems:
Public Act 100-0281 prevents a double-dipping problem that has occurred in the suburbs recently. Police officers and administrators could retire after putting in 20 years on a force, start collecting a pension, then join another force or take a new top job with a different title in the same force and start working toward a second pension, while collecting the first and taking a generous taxpayer-provided salary.
Some suburbs like Schaumburg and Naperville actually rehired former chiefs and named them civilian police directors in order to keep from losing them to other communities once they became retirement eligible.
State Rep. Grant Wehrli, a Naperville Republican, sponsored the bill after watching former chief Robert Marshall return to the force seven years after his retirement. Marshall was paid a $168,000 salary, was collecting a pension and could begin contributing to a second one. Under the new law effective in 2019, law enforcement officers like Marshall who take government jobs instead will be able to contribute to a 401(k)-style plan with a negotiated employer match rather than joining a pension fund again.
Wehrli said he wanted a broader bill, but scaled it back to win enough support. The onus now is on towns to negotiate salary and benefits for these retired officers and the benefit to the officer is that a 401(k) account gives them a portable asset they own.
“Everybody sees the problem. Everybody wants what’s fair,” said Wehrli, who is studying using the model for other public workers. “Double dipping isn’t fair.”
Some would argue people taking a government salary and collecting pension payments still are double dipping and that public workers should not get pension payments until they’re retired from public employment, but Wehrli said he took what he could get done. “Let’s start somewhere.”
Martwick notes another new law tries to clear up what it will take for part-time trustees or others to join the Illinois Municipal Retirement Fund. Public Act 100-0274 says people elected after next year, who work less than 1,000 hours in a year, are considered part-time and cannot join IMRF. That law should stem the practice of some people trying to collect pensions for work that is limited to a few meetings a month.
Public Act 100-0334 will stop the spouse of a public employee from receiving survivor benefits if they’re convicted of a felony related to the service of that spouse. State Rep. David McSweeney and state Sen. Pamela Althoff sponsored the bill in response to attempts to collect a pension by the wife of Fox Lake Police Lt. Charles Gliniewicz, who herself is fighting charges she was a party to his money laundering.
There’s still much more work to be done to prevent pension fund abuse, like spiking of salaries at the end of careers and giving people credit for more time than they’ve really worked. And Illinois should be contributing more to its pension funds, not less. Delay is not be an acceptable option.