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Emily J. Miller

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State's Pension Reform Amendment Falls Short

Posted: 10/30/2012 5:42 pm

Voters get to weigh in on the hot topic of fixing state pensions this upcoming election.


But the big question is: Will their vote really do anything to reform Illinois' financially devastated retirement system?


On November 6th, voters will be asked to approve or reject a proposed constitutional amendment that purports to promote public pension reform. Basically, the measure would require that all new pension sweeteners be passed by a three-fifths majority vote in the Illinois General Assembly.


Right now, it takes only a simple majority to approve any enhancements.


While some lawmakers tout it as a major step forward for pension reform, a BGA examination of the proposed amendment concludes that's not the case.


For example, the pamphlet mailed to voters by the Illinois Secretary of State makes the claim that this amendment will address the unfunded pension liability burdening Illinois taxpayers.


In fact, the amendment does no such thing.


Nothing in the amendment puts Illinois on track to meet growing pension obligations, which are now underfunded by at least $80 billion. The amendment addresses no new funding mechanisms, repairs or changes to the Illinois Pension Code, the law that oversees the state's pension rules.


Instead, the amendment ostensibly requires more accountability in Springfield when it comes to pension votes -- it boosts the threshold for the number of votes needed to pass a pension "benefit increase" to a three-fifth majority, or 60 percent.


This referendum would have greater impact if legislative votes to increase pension benefits were eking by with just a simple majority, but that's not the case.

Looking back 10-15 years, every pension vote that increased benefits has received well over a simple majority of yes votes, according to the Illinois Municipal Retirement Fund (which has no position on the amendment).


And many of those bills used common pension scams like salary spiking or credit transfers to increase benefits of a specific person or group of people with political connections -- an issue the BGA has investigated and reported on repeatedly.


For example, in 2007 the House and Senate voted by margins of 80 percent and 93 percent, respectively, to boost the pension of Oak Brook Police Chief Thomas Sheehan by $30,000 a year through special credit transfers. That means a bill to create special pension perks for one person soared through the legislature with well over the proposed 60 percent majority requirement.


In addition to doing nothing to address Illinois' growing unfunded pension liability or put any real checks on lawmakers' ability to increase that obligation at will, the amendment presents several technical problems. It uses new terms found nowhere in the pension code or in the regulations governing pension funds, making it impossible to understand the practical implications of the proposed language.


Overall, the BGA contends this amendment claims to be a move toward pension reform, but it fails to meet that worthy goal.


That's something voters should keep in mind when going to the polls next Tuesday.


Emily Miller is the BGA's Government and Policy Affairs Coordinator. She can be contacted through email or at 312-821-9034. You can follow her on Twitter @EJMill.

 
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