Why we have no choice but to change the rules for current workers



We've recently received several letters from members of the various State pension systems asking how we could advocate changing the rules in the middle of State employees' careers - especially when it's not their retirement benefits that have bankrupted the system, it's the elected officials who failed to set adequate funds aside to cover those benefits.

Illinois now has roughly $140 Billion of general debt. Of that about $130 Billion is related to the State's retirement programs - unfunded pension obligations, pension bonds/notes, and unfunded retiree health care obligations.  The main reason for the large retiree-related debt is that the State has consistently underfunded these programs.  

However, these retirement programs are also more generous than those of the general taxpayer.

On top of that, the State faces a severe fiscal crisis.  We have an annual budget hole in Illinois of about $15 Billion when you include both cash and accrual costs (costs that we should be putting money aside to cover).  Our annual retirement-related costs are more than $10 Billion.  Most of these costs are not funded each year - so the debt just continues to grow.

To fix this problem, we must address two points: (1) the issue of fairness - public employees receiving retirement benefits more generous and more costly than those generally available in the private sector, and (2) the fact that the State is broke.

It's instructive to look at the private sector where employers were compelled by economic circumstances to shift to less costly - and less generous - plans going forward.  They preserved all rights that their workers had earned to date, but shifted prospectively to less costly plans.  Nobody liked it.  But that's what had to happen throughout the private sector in order for companies to remain solvent and preserve jobs.

These private sector workers make up the majority of the taxpayers in Illinois - the people who pay the State's bills.  It's unfair to ask them to support State employee retirement programs that are so much more generous than their own.  

We're concerned that the working families of Illinois are unaware of how serious the State's fiscal crisis is - or what the consequences of it will be if it isn't dealt with very soon.  The State's debt will "crowd out" support for lots of things we all put a high value on - K-12 schools, universities and community colleges and social services. The State will be forced to continue to borrow, and at some point it won't be able to borrow any more.  

We'll run out of money. Public services will have to be cut back significantly.  And when the tax increases come, they will be a lot worse because of all the piled up debt from the past.  

It's already starting to happen.

That's why we care a lot about getting this fixed.  We cannot go on like this.  The State is close to reaching a financial tipping point.  Illinois needs real budget reform, including reform of state pensions and retiree health care programs.

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