It’s been nearly six months since sweeping pension reform was passed in Illinois, but the debate continues as some say they got the shorter end of the stick.
A lawsuit could stop the reform from happening.
Back in December 2013, Illinois lawmakers passed a pension reform in hopes of fixing one of the worst pension systems in the county. The system was underfunded by more than $100 billion.
“The problems were so large that in order to solve them or to take step towards solving them we needed to make pretty significant changes,” said Illinois State Rep. Tom Demmer (R) Dixon.
If the reform works as Demmer and other lawmakers hope, it will cut Illinois’ pension spending by $160 billion over the next 30 years.
“When you look at 100 billion dollars in unfunded pension liability, there’s no easy way to get around that; there’s no small tweak you can make, there’s no hidden savings you can tap into. So, we knew the changes that needed to be made were the difficult ones,” said Demmer.
However, with change comes sacrifice, at least for some. The reform calls for increasing the retirement age, and limiting retiree’s cost of living adjustments are just some of the measures included in the legislation.
Stew Adams said he wanted to be a teacher his entire life, and he taught special education in Rock Island for 33 years. Even though Adams is retired, he’s still actively involved with the Western Illinois Retired Educators and on the state’s pension defense team.
“I’ve had to work hard, gone to school, I’ve taken additional education classes, to get where I want to be to make a decent living; and expected that the pension would be there for me. And now they’re slapping me on the back of the head making it my fault,” said Adams.
Adams and other retirees say pension cuts they face are a slap in the face.
“It’s like you get stabbed in the back, but you get continually stabbed in the back multiple times,” said Adams.
Andy Shaw is the CEO for the Better Government Association, an Illinois watchdog group based out of Chicago, who says the changes are painful to some but they are necessary.
“This was a long overdue bill that inflicts pain, unfortunately, on working people. But, there really wasn’t any other choice. The politicians let the system get out of control by over-promising and under-funding,” said Shaw.
With this reform come winners and losers.
“The win is for the overall system that can’t survive a billion-dollars increase in pension cost every year,” said Shaw.
Along with a healthier government, Shaw says reform should also lead to a more fair government.
“Winners of this pension reform bill are people who are sick and tired of pension abuse, people who are scamming the system and coming up with these gigantic pensions, and end-of-career bonuses and things that double their pension, in some cases, when it’s totally undeserved. The bill eliminates the half-dozen scams,” said Shaw.
The eliminated scams include an abuse we told you months ago that allowed non-state employees to receive a public pension.
Some might argue that judges are winners too, considering their pensions weren’t touched.
“I was disappointed that judges were exempt I think we should have applied this to all five state retirement systems,” said Demmer.
“It doesn’t take a brilliant scientist to figure out why they didn’t affect judges because, ultimately, they’re going to be the ones that decide the fate of this legislation,” said Adams.
“In a perfect world, we would punish the politicians responsible for this by over-promising and under-funding, but that’s not how it works,” said Shaw.
Who stands to lose the most
The legislation will likely end up in court. Several groups have filed suit against the state, claiming the reform is simply unconstitutional.
“It very clearly states in Article 13, Sections 3 and 5, that our pension – according to the 1970 Illinois constitution – should not be impaired or diminished,” said Adams.
It will be up for the courts to decide if the measure stands, though.
“It’s unfair to people who went into government employment thinking that their retirement would look this way, only to find that it may look that way – and that way isn’t quite as good,” said Shaw.
“When we made those promises, those were richer than we could afford to make. We didn’t pay for those adequately, we didn’t make the investments we needed to in order to pay that,” said Rep. Demmer.
It’s a deal that is done for now, whether people like it or not.
“It’s a devil’s bargain either way. Unfortunate, but necessary,” said Shaw.
As far as the losers, Adams says that group includes “Anyone who had a pension that’s now been reformed.”
The reform is slated to go into effect June 2014. With multiple suits filed, the court may act to delay the effective date of the law.