Madeleine Doubek: Waiting won’t solve state pension problems

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Remember pensions? It’s been exactly seven months since the Illinois Supreme Court told us, unanimously, that the state cannot force changes to pension benefits on public employees and retirees.

The state’s leading politicians continue to mouth meaningless sound bites about the budget. They’re delaying any real attempt at reaching a budget compromise until at least January, seven months late, when they will need fewer votes to pass a tax increase in the new year. By then, eight months will have passed since the pension ruling. All this time has been wasted. We’re not been figuring out how to manage the pension behemoth or our other recurring and growing debt loads.

Next month (I hope), Gov. Bruce Rauner, House Speaker Michael Madigan, Senate President John Cullerton, Senate Republican Leader Christine Radogno and House Republican Leader Jim Durkin will agree to pass a budget compromise that will spend somewhere around $36.3 billion, and $6 billion of that will need to be deposited into the state’s pension funds. A month later, in January, Rauner is required to make a budget speech for the next budget year that starts three months later. Next June, we start a budget year with a $7 billion pension payment in a similar spending plan. That’s nearly 20 cents of every state dollar going to pay people who aren’t working for us anymore, with 80 cents left for schools, roads, prisons, day care, health care for needy and on and on.

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“Trying to adopt a budget without pension reform is like trying to do surgery with a butter knife,” state Rep. David McSweeney, a Barrington Republican, said long before last week’s show of a faux budget confab.

McSweeney is among the lawmakers who believe pensions could be brought to a more manageable burden by restructuring the payment cycle and by trying to see if Illinois Senate President John Cullerton’s notion of offering “consideration” to public workers might be doable. That involves offering workers a choice of different options that could cut pension debt, too.

Freshman state Rep. Mark Batinick, a Plainfield Republican, is sponsoring a spin on the consideration concept. He suggests offering retirees three options:

1. Keep your pension as is.
2. Take an accelerated lump payment now for the present value, with a discount for the state.
3. Or, take a partial annuity and partial lump payment.

Like early retirement offerings of the past, every person who opts for choice 2 or 3 helps lower our pension debt down the road a bit. Batinick’s been trying to get hearings on the concept since late September.

Meanwhile, the University of Illinois’ Institute of Government and Public Affairs released a study that finds our politicians don’t follow sound budgeting principles. What a shock, right? Still, the IGPA and the Volcker Alliance teamed up to suggest ways our state and others can boost accounting accountability and transparency.

The five suggestions from the IGPA are:

1. Expand multi-year budgeting
2. Require meaningful notes about the cost of legislation
3. Modify budgets to show significant changes in liabilities and assets
4. Be transparent about using non-sustainable or one-time revenue sources
5. Adopt a broad-based budget framework and use it consistently over time.

David F. Merriman, co-director of the IGPA’s Fiscal Futures Project, said being transparent about one-time borrowing of funds to pay bills and “making clear what effect current budgets have on the future” is one of the key changes that could be made.

“We’ve done nothing,” he said. “We understand why they’re stymied on the substantive issues. We’re hoping this might be an avenue to get into some of these issues.”

It would be better than spending months doing nothing.

“The thing that gets me very frustrated is this idea that we should wait for January,” McSweeney said last month. “We have to move forward. Nothing good is going to happen by waiting. Let’s just stop the madness.”

Madeleine Doubek is chief operating officer of Reboot Illinois.

Email:mdoubek@rebootillinois.com

Follow Madeleine Doubek on Twitter: Follow @MDoubekRebootIL

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