Cook County has a big underfunded pension problem, but it has been overshadowed in two ways: Illinois and Chicago are swimming in so much more red ink that no one notices the county’s, and the political warfare in Springfield has relegated the county to an afterthought.
That’s too bad, because structural problems in the county’s pension system are running up a huge tab for taxpayers. To keep the debt from piling up further, County Board President Toni Preckwinkle and other county officials have come up with a sensible fix, which the Legislature should enact without delay. We’d hate to see a farsighted plan die in this legislative session.
The county’s reform bill, unlike the one the Legislature patched together for state pensions in 2013, looks solidly constitutional. The Illinois Supreme Court rejected the state bill earlier this spring partly because, as the Court pointed out, the Legislature for many years willfully failed to make required annual payments into its pension funds.
But Cook County — and this is a huge distinction — has always paid in the maximum allowed by law. Its pension fund is short primarily as a result of two market crashes and unfunded pension sweeteners added by the Legislature. The county can argue, quite plausibly, that it has done everything within its legal powers to uphold its end of the contract.
This is not an issue that can be shoved aside without consequences. After Chicago’s, Cook County’s pension fund has the worst local-government revenue/liability ratio in the country. Every month the pension fix is delayed, debt increases by $30 million. If Springfield fiddles around much longer, the proposed pension reform won’t work anymore. And nobody has a plan for what would come next.
Even now, the pain of reform will be real. The county will have to come up with an extra $147 million a year, money that will have to come from cuts and tax revenues. The proposed law would allow the use of money from sources other than property taxes, but the county hasn’t said where it will find the money. Under any scenario, taxpayers will take a hit.
Workers and retirees would take a hit, too. For many, benefits would be reduced and the retirement age would rise gradually.
But there would be benefits, too, including guaranteed retiree health care contributions and, most important, a sound pension fund. It won’t go bust. That’s why 67 percent of the county’s unions, including 60 percent of county unionized workers, are backing the plan.
In all, taxpayers would pay 60 percent of the cost of the reform and workers and retirees would pay the rest, a ratio equal to the shares they have paid into the fund in the past.
In all likelihood, the pension reform bill will wind up in the Illinois Supreme Court. All the more reason to start the process now. The Legislature should pass this bill, and Gov. Bruce Rauner should sign it.