Latest laws take some pension pain from Illinois, policy analyst says
The budget package passed in July stands to exacerbate Illinois’ worst-in-the-country pension debts, but some lawmakers are fighting to make strides against future debt, according to Madeleine Doubek, policy director of the Better Government Association.
“If you think all is right in Illinois because we have a budget and school funding, you are sadly mistaken,” Doubek wrote on the group's website. “Illinois still has the worst pension debt in the nation, estimated at $130 billion, and that first budget in more than two years actually made the problem worse.”
According to Doubek, the pension fund board lowered the expected rates of return for pension funds to 7 percent last year, necessitating an increase to government contributions. In a process called smoothing, Gov. Bruce Rauner and House Speaker Michael Madigan (D-Chicago) agreed to phase in those increases. Doubek reported that state contributions, which swallow nearly a quarter of tax revenues, will decrease by $1.5 billion.
“The Illinois Supreme Court ruled a few years ago that just cutting retirement benefits was not a legal option, so ignoring the problem, or taking more time to deal with it, isn’t going to make it go away,” Doubek wrote.
Doubek pointed to several lawmakers in the General Assembly who are working to create solutions to some of the factors contributing to the state’s pension debt. A bill sponsored by Rep. Grant Wehrli (R-Naperville) and recently enacted works to cut down on future pension costs by preventing "double-dipping."
Prior to the law, police officers and administrators could serve for 20 years, retire, collect their pension benefits, and then move on to a new force or even a new position at the same force and receive both their pension payments from their first jobs and salaries from ther second. They could also begin working toward a second pension.
Wehrli saw this unfold in Naperville, where former Police Chief Robert Marshall retired only to return to the job seven years later, working toward a new pension while receiving pension payments on top of a $168,000 salary.
Law-enforcement officers are now barred from joining a pension fund after retiring and are moved to a 401(k)-style plan instead. As Doubek notes, this means that the government units employing these officers will now need to negotiate with them. Wehrli also wanted to prevent the officers from receiving pension payments until they fully retired from public jobs but dropped the plan in exchange for broader support.
Another law highlighted by Doubek clarifies that only people who work 1,000 hours a year or more may qualify to join the Illinois Municipal Retirement Fund. This will prevent some trustees, whose public work consists of several meetings each month, and other part-time government employees from drawing pensions.
Yet another law stems from the case of Fox Lake Lt. Joseph Gliniewicz, who killed himself in a suicide staged as a murder after his embezzlement came to light, according to NBC Chicago. His widow, herself facing charges related to the money laundering, has tried to collect survivor benefits from his pension. The new law blocks pension payments to spouses of public employees in cases where those spouses are convicted of a felony related to their service.
Additionally, Reps. Robert Martwick (D-Chicago) and Mark Batinick (R-Plainfield) have worked on legislation that would allow the state to move some pensioners from a 3 percent compounded interest to annual cost-of-living adjustments in return for lump-sum buyouts.
Doubek applauded these efforts to address pension debt and limit pension fund abuse but said the state still has a lot of work to do, not the least of which is making appropriate contributions.
“Illinois should be contributing more to its pension funds, not less,” Doubek wrote. “Delay is not be an acceptable option.”
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