In his budget address Wednesday, Gov. Pat Quinn went over his top budget priorities for fiscal year 2014. He placed the speech’s main focus on the state of underfunded pensions.
In case you missed the speech, we’ve pulled out some of the key statements.
Public sector pensions
Quinn stressed that some public employees would no longer have the cost of living adjustments as part of their pensions, and that the amount of adjustments would need to be changed going forward.
“There should be adjustments to pension benefits to fundamentally resolve this crisis.
These adjustments should include reforms to the pension cost of living adjustment. The [cost of living adjustment] is currently 3 percent compounded annually. That’s unsustainable for taxpayers.
For those with higher pensions, the cost of living adjustment should be suspended until the entire pension system achieves better balance.But the pension reform solution should include cost of living adjustments going forward.
A larger contribution of payments to pension funds should also come from employees themselves, Quinn said.
In addition, employees should adjust their own contributions to their pensions.
A few weeks ago, I attended the summit called by representatives of public employees. I listened to them.
I was pleased that they volunteered to raise their employee contribution to help resolve the pension crisis. This offer should be part of the solution.
Education spending will also take a cut in Quinn’s proposed budget for fiscal year 2014, with a proposed 3.5 percent decrease in general state aid to schools.
But in his speech, he didn’t mention this cut, touting instead that the budget “preserved investment in early childhood education” and “[Monetary Award Program] scholarships for Illinois college students who are in financial need.”
The Illinois Department of Children and Family Services would also see a 2.2 percent cut in its general operations budget. The Illinois Department of Human Services, meanwhile, would receive an overall budget increase of 10.4 percent, but some individual programs would see a cut. The Domestic Violence Partner Abuse Intervention Program would see a 13.7 percent decrease in its funding, while Mental Health Permanent Supportive Housing would have a 24.2 percent cut.
Who’s the blame for these cuts? Quinn pointed to the Illinois General Assembly’s inaction on pensions.
There are significant reductions in this budget that I do not want to make—and that none of you will want to make either.
These reductions are the direct result of the General Assembly’s lack of action on public pension reform.
Our pension obligations have squeezed out funding for core services. And every day that passes without pension reform, the problem gets worse.”
Photo credit: ChrisEaves.com