Executive Director Reports

We didn't create pension crisis; but we have to help find a solution

Fortunately for AFSCME members in Illinois, the framers of our state constitution, adopted by voters in 1970, guaranteed the benefits of public pension plan participants. That's the good news.

The bad news is that that same constitution does not require payments to the pension systems. And as you might expect, if politicians can find a way to shirk their responsibilities, they'll do it.

Thus for decades, when the pension funds were more solvent, past governors and legislators in Springfield, mayors in Chicago and presidents of the Cook County Board often failed to base their contributions on sound actuarial principles, even as AFSCME members and other plan participants have faithfully made their payments from each paycheck.

The result is a combined unfunded liability of more than $100 billion - worst in the nation - in pension funds covering the state of Illinois, state university, city of Chicago and Cook County employees.

Contrast that with the Illinois Municipal Retirement Fund, which covers local governments outside of Cook County. By law, IMRF employers have been required to make their full payments every month.

The difference in solvency between the IMRF, whose benefits and employee contributions are comparable to the other funds, makes clear that the pension shortfall we confront is not one which derives from overly generous benefits, but from the failure of the state, the city of Chicago and the county of Cook to behave responsibly.

Given that fact, one would have hoped that proposals to address the pension crises would have dealt with the real problem, the failure to properly fund the benefits provided by the Pension Code.

Instead, there has been a steady barrage of attacks on benefit levels, first for public employees hired before Jan. 1, 2011, who were not constitutionally protected until they became employed. And now all current employees, no matter when they were hired, are under fire.

Led by a deep-pocketed bunch of business bigwigs, with the backing of the governor and the legislative leaders, the drumbeat has been unrelenting.

When the unions' We Are One coalition beat back last year's attempt to diminish the benefits of employees hired before 2011, the corporate chieftains came right back with a new PAC that aims at raising $1 million to elect legislative candidates who will lead the attack to gut pension benefits.

At the same time, the Illinois House has passed a resolution, by a vote of 113-0, which would amend the state constitution to require a three-fifths vote by the state legislature, school boards, city councils and county boards to improve any pension benefits.

The one thing all of the many phony solutions like these have in common is that none of them address the fundamental problem: how to guarantee funding going forward, so Illinois can dig itself out of this pension hole.

No matter what the pension benefits are, if you don't pay off the $100 plus billion you already owe, and the costs of the annual accrual, you'll never get to level ground.

Absent proper funding, the pension systems will go belly up, putting us in totally unchartered waters.

Will the courts order the state or the city of Chicago or Cook County to give money to their pension systems if they're broke?

We don't know.

We do know that thus far the courts have said there's a constitutional requirement for the pension system to pay benefits, but there's no legal requirement for any governmental agency to make payments into its pension system (except the IMRF which doesn't face future insolvency).

So, if a pension system doesn't have enough money to pay the benefits owed, will the employer be forced to pay more into the system?

We would hope the answer to that question would be "yes," but we can't know for sure, and I don't think we want to find out.

That's why the union coalition has made it clear to the governor and the legislative leaders that we are willing to work toward a real solution to the problem.

First and foremost we must have a guaranteed funding mechanism similar to the one that keeps the IMRF in such good financial shape. The solution also must be constitutional, of course, and it must be fair to the systems' participants.

Achieving a solution to this monumental problem will not be easy.

We could stand on the sidelines and leave it to the politicians, but they created the mess in the first place, and the proposals they've put forward thus far are only about cutting benefits.

After we beat back the legislature's last attempt to gut our pensions, public-employee unions said we wanted a seat at the table.

After all, it's our retirement security at stake. We have a responsibility to ensure that after having fought so hard to achieve livable pensions, we don't let our pension system fail.