Dan Liljenquist: Illinois needs to solve its own pension problems

Published: Thursday, Feb. 7 2013 9:12 a.m. MST

Illinois state union members and supporters rally in support for fair pension reform in the rotundra.

Seth Perlman, Associated Press

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The state of Illinois is in deep trouble financially. Last week, Standard & Poor's Ratings Services once again downgraded Illinois' credit rating. It is now the worst in the country. This latest downgrade came shortly after Gov. Pat Quinn and state lawmakers failed to fix the Illinois pension system, which is $96.8 billion in the red. Illinois public employee unions fiercely opposed the pension reform efforts, and they once again carried the day in Springfield.

Now that they have successfully squashed pension reform efforts at the Legislature, the Unions are working on a new strategy — get the federal government to bail out the Illinois pension system. Gov. Quinn floated this idea in September of 2012, and was blasted for it. But now rank-and-file Union members are picking up the bailout banner. In a letter printed last week in the Peoria Journal Star, Gene Beltz, an elementary school principal, argued for a federal bailout citing the recent auto industry bailouts. He wrote, "Why couldn't the same concern and assistance be shown for a state in financial distress and for the welfare of thousands of Illinois teachers and other employees? Teachers did not create this problem."

While it would be difficult to blame individual teachers for the pension mess in Illinois, much of the blame certainly falls on the unions representing them. In the 1970s, public employee unions successfully backed an amendment to the Illinois Constitution that guarantees that pension benefits "shall not be diminished or impaired." Unions then went to work lobbying for additional pension benefits, whether the state had the resources to pay for them or not. At the same time, the unions did not let up on their constant demands for higher wages and better health care benefits. Fully funding the pension has not been a priority for the unions.

A case in point is the recent Chicago Teachers Union strike last September. At a time when Chicago public schools faced a $1 billion budget deficit and were unable to afford pension contributions, Chicago school teachers took to the streets for nine days demanding higher wages. The strike was timed to create the greatest amount of leverage possible with Mayor Rahm Emanuel, and by extension President Barack Obama's re-election campaign. Ultimately, the Chicago Teachers Union won 17 percent wage increases over four years for their members. Those wage increases will translate to higher pension payments for these teachers upon retirement, further exacerbating the pension funding problems.

The unions have always believed that taxpayers would have to pay the pension bill whether they wanted to or not. But taxpayers in Illinois are fed up. Illinois citizens are still fuming about the 67 percent tax hikes that Gov. Quinn and the Legislature passed in 2011. They are in no mood to pony up more money to pay the pension tab. So the union strategy is to find taxpayers in other states to foot the bill.

Congress must not let this happen. Illinois must solve its own pension problems. They are perfectly capable of doing so. They should suspend cost of living adjustments, cut service credits, increase years of service and migrate to a retirement structure with predictable costs. Illinois' pension system is no worse off than Rhode Island's system was. But Rhode Island, with the leadership of Treasurer Gina Raimondo, took initiative to solve its own problems. Illinois should follow suit.

But what of the constitutional pension guarantee? That guarantee is only as good as Illinois' willingness and ability to pay for such a guarantee. In no way, shape or form does that establish a claim on someone else to pay the bills.

Dan Liljenquist is a former state senator and U.S. Senate candidate.

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