State pension reform needed, now!
To the editor:
Illinois has a general fund budget deficit of more than $14 billion. Furthermore, the Illinois Teacher Retirement System (TRS) has a $41 billion deficit, which is worst in the nation. Illinois' unfunded TRS deficit has been increasing for 20 years. As deficits continued to increase, local politicians approved a series of bad short-term plans: borrowing, bonding, and re-bonding. These bad choices have made the TRS pension deficit worse.
In Massachusetts, Gov. Deval Patrick (D) proposed new limits on pension payouts for state employees. His plan was developed from recommendations of a pension overhaul commission and reduced pension deficits by eliminating the most generous retirement plans that were available for selective state employees. Patrick capped certain early retirement incentives, increased retirement ages and changed the formula for pension calculations. While some of the reforms applied to new and current state employees, others only applied to new employees. The bottom line for Massachusetts was a $2 billion savings, a financially sound pension for state employees and a 2011 budget with no broad based tax increases.
Illinois citizens could benefit from something like the Massachusetts pension plan reforms to reduce pension liabilities. Oregon, Washington and Ohio offer hybrid pension plans that combine elements of both defined benefits and defined contribution plans. Other states are raising the retirement age and closing loopholes within pension systems, which had allowed state employees and politicians to inflate their pension benefits at the expense of the citizens. Among other reforms, 13 states have established irrevocable trusts to pay retiree health care in years to come. Irrevocable trusts do not allow politicians to get their hands on special funds.
The current local politicians have displayed a stunning lack of fiscal responsibility and poor judgment in keeping pension plans from heading toward bankruptcy. Because they used inappropriate, risky and inadequate devices, coupled with the routine transfer of funds from the TRS to the general fund to pay for pork projects, current local politicians should be challenged by voters to pass a comprehensive Pension Reform Fairness Act in 2010.
This is an election year and generally local politicians don't want to make tough decisions. This year must be different, since citizens know that pension reform is needed to return the State of Illinois to a sound financial condition and keep our taxes low.
Republican candidate for State Representative