(Editor's note: This Wirepoints op-ed was originally published in the Chicago Tribune).
Fifty words, added to the Illinois Constitution as an amendment, could be what helps save the state from an inevitable financial collapse in years to come.
“Nothing in this Constitution or in any law shall be construed to limit the power of the General Assembly to reduce or change pension benefits or other benefits of membership in any public pension or public retirement system, whether now or in the future, accrued or yet to be earned.
That language, or something largely equivalent, would grant Illinois’ legislature the broad powers to reform what Moody’s calculates is more than $420 billion in debt owed to hundreds of state and local government-worker retirement plans.
Without a significant reduction in that debt, it’s almost impossible to imagine a scenario where enough Illinoisans will stick around to pay down that shortfall. Every Illinois household is on the hook for about $90,000 in future taxes — an obligation many are already avoiding by fleeing the state.
Illinois’ seven-year drop in population and its near-junk credit rating are both warnings that a pension amendment and subsequent reforms are long overdue.
Unfortunately, Gov. J.B. Pritzker calls pension reform a “fantasy,” claiming any efforts will ultimately fail: “The idea that all of this can be fixed with a single silver bullet ignores the protracted legal battle that will ultimately run headlong into the Contracts Clause of the U.S. Constitution.
Even some Republicans, including state Rep. Tim Butler and gubernatorial candidate Paul Schimpf, are parroting the governor’s general talking points.
But they’ve got the facts wrong. Wirepoints has assembled the full legal case for reforms, but in short, federal law isn’t an obstacle if reforms are “reasonable and necessary.” The proof is in what’s happened in states across the country.
Every state has amended pensions in some way since 2009, according to the National Association of State Retirement Administrators. Cost-of-living adjustments (COLAs) have been reduced, workers are contributing more, and 401(k)-style plans have been introduced — not just for new workers but, in some cases, for existing workers, too.
The two states with the most relevant changes for Illinois are Arizona and Rhode Island.
Arizona, which has constitutional protections that mirror those in Illinois, reduced its public safety pensions in recent years by amending its constitution not just once, but twice. Those opposed could have challenged those reforms under federal law. Five years on, no one has tried.
In contrast, recent municipal pension reforms in Rhode Island faced significant public-sector resistance. The state has no pension protection clause, so opponents claimed the reforms violated federal law, including the federal Contract Clause. The Rhode Island Supreme Court rejected that argument, and the U.S. Supreme Court declined to hear an appeal, leaving the reforms intact.
The experiences in both states contradict Pritzker’s claims that the U.S. Constitution automatically prohibits any changes to pensions.
With no legal excuse to fall back on, Illinois lawmakers must vote to put a pension amendment on the ballot so Illinoisans finally have a chance to approve the changes this state needs.
Some will criticize Wirepoints’ amendment language as too broad, preferring to limit the scope of potential reforms. And yet others will demand very “narrow” wording, much like what was used in Arizona, that limits amendments to the precise language used in legislating any reform.
But limiting Illinois’ amendment would be a mistake.
Illinois is the nation’s extreme outlier when it comes to pension debts, in both size and scope. With 650-plus state and local pension funds in varying need of reform, opening the constitution over and over again is unworkable.
Illinois’ five state-run funds are the nation’s worst off, while Chicago’s crisis, with several funds now near total insolvency, is also in a category by itself. At the municipal level, Rockford’s situation, for example, is far different from that of Harvey’s. And Illinois’ retiree health insurance plans, now $74 billion in the hole, deserve their own set of reforms. The legislature needs flexibility.
Also, if markets tank or resident flight accelerates, lawmakers need the ability to respond with additional, deeper reforms.
Illinois politicians have overpromised pensions for decades. They’ve been enabled by a lopsided constitution that lets them dole out benefits — compounded COLAs, early retirements, sick leave credits, free retiree health insurance, salary spiking and more — but outlaws any reductions that could bring benefits in line with what ordinary residents can afford.
Illinoisans, and potential future residents looking to move here, need to know this state is finally serious about fixing its worst-in-the-nation pension crisis.
Adding 50 words to the constitution would be a start.