SPRINGFIELD — As Illinois lawmakers weigh how to fill in a budget deficit as deep as $12 billion, they may also consider changes to how retirement payments are made to state employees.
For years the state has underfunded its public employee pension systems. Recent estimates have put the debt owed to the state’s public employees — both working and retired — at $80 billion .
Administrators from the state’s retirement systems spoke to a legislative committee Tuesday evening on the importance of making consistent pension payments.
State Sen. Pamela Althoff, R-Crystal Lake, said the state’s pension debt would be difficult to solve in one year.
Eden Martin, president of the Civic Committee of The Commercial Club of Chicago, said the state’s continued unwillingness to pay off the pension debt would cause big problems.
Lawmakers brought up a number of potential changes to the state’s pension systems, such as increasing the retirement age, capping annual payments to pensioners and abolishing mandated annual increases in payments.
One cost-cutting suggestion included instituting a two-tiered pension system, where incoming employees would have a reduced set of benefits compared to current retirees.
But Tim Blair, acting executive secretary of the organization overseeing three of the five state-funded retirement systems, said lawmakers needed to consider both the current pension debt and cost-cutting moves for the future.
Lawmakers have struggled to make its full payment to the pension systems in recent years because of the economic recession.
Before the recession, lawmakers skipped pension payments and used the money for other uses.
Last year, lawmakers and Gov. Pat Quinn approved of selling $3.5 billion in bonds to help make the state’s 2010 contribution to its pension systems.
The independent Pew Center on the States reported that Illinois ranked last out of all 50 states with the largest total unfunded pension liability.
State Sen. Matt Murphy, R-Palatine, said juggling priorities would be difficult because of the state’s fiscal problems.
Generally speaking, even though the media and employers are saying different, the current state deficit will affect everything no matter what, Although the President of our University is claiming that civil service employees will not be affected by the state of affairs (in 2009) …. there is no doubt that civil service staff will certainly be forced to take furlough days, and the faculty and those not considered civil service will not. Why would those who make way less pay, be the ones penalized w/furlough days? We are barely surviving off of the underpay we currently get as employees of one of the lowest paying universities in Illinois. If forced w/furloough days, the least they can do is let us choose which days those would be and if we want to use them all at once.
I am very concerned that I will not have my retirement money for when I retire in 2 years. I just paid in $14,000 (maternity leave and substitute pay) because the TRS said that this was DEFINITELY the thing to do to help my retirement. Now am I just going to lose all of my money that I have paid in for 30 years?????? I have to live on a teacher’s salary and budget my money. I am so sick of our state and federal government not paying their bills and not paying the pension fund when they were supposed to. I can’t count on a future pension? That will really help me sleep better at night. I hope you find some answers to this dilemma soon.
To the lawmakers: I support you in your effort to be fair to all, but please keep in mind that retirees count on the provisions of their pensions and have no way to compensate for any cuts. Current employees and new hires have the option of working longer or seeking employment with better benefits; retirees are most unlikely to find any way to augment their retirement income.
From the vantage point of Europe, the quotes by the politicians wanting to be “fair” to government employees sounds very Greek, very Portuguese and very Spanish in the moment. But especially Greek, because like Greece, Illinois’ government debt is the most pressing state burden in the US as Greece’s is the most pressing in the EuroZone. The real answer is to cut the size and cost of government, which has sent Greek government workers into the streets in protest. It will happen in Illinois, unless the politicians are smarter than the Greek politicians who being forced to do what they said they could not. This is not “public” debt; it is government debt, and productive Europeans are fed up with the pressure to fund those who cannot keep their houses in order. This is what is coming for Illinois — shortly. You should note that German voters sent Merkel a clear message of unrest for bailing out Greece this time.
ere than anyone else!
As a state employee getting ready to retire in the next few years, I am very concerned with the way the pension debt problem will be resolved. In the past, government leaders negotiated pension benefits with their employees. The negotiations always followed the national trends and benefits were never considered egregious. That compared to the egregious benefits lawmakers receive in their pension benefit. Never has there been a more obvious feathering of one’s own nest. My point being that the pension benefits are not the problem that threatens to squeeze out state services. Rather, it was the mismanagement of tax payer dollars by lawmakers. Priority has never been given to the employees, rather state leaders diverted pension money to pay other constituents (mostly business) and to pay for the services provided to the population of Illinois. In essence, the employees loaned the state this money. Now state leaders are again faced with making tough decision on how to prioritize spending. Once again employees find themselves at the bottom of the priority list. Employees begin contract negotiations in January, 2012. We will be coming to the table not with the intensions of asking for rewards for our continued service, but rather a plea to state leader to pay what the state has already committed to us. A couple of facts to keep things in perspective: State employee payroll makes up only 5% of state budget, Illinois has the least number of employees per capita than any other state. Illinois state employees provide more services with the least employees than places like Texas, Alabama and the rest. There are many in the business communities who equate cutting employee pensions with solving the pension debt problem, yet the truth is that cutting employee pensions doesn’t address the problem at all. You can cut employee pension to zero and we are still faced with the problem of the unpaid obligations. We all know that paying our bills is tough. It’s tough for me also, but I do it every 2 weeks. The state should do the same.