 Despite some recent reform, lawmakers are still looking into making
more changes to the state's underfunded pension system. The last
General Assembly raised the retirement age to 67 and placed a cap on
benefits for state employees hired after Jan. 1.
Illinois caught the attention of the U.S. Securities and Exchange
Commission in January. The state has been cited for having one of
the worst pension systems -- it is funded by only 45.4 percent, with
about $138.8 billion in liabilities as of June 30, 2010.
That's the most recent data, according to a February briefing by
the state's Commission on Government Forecasting and Accountability.
Kil Huh, research director for the Pew Center on the States, focuses
on states' fiscal research. He notices a trend that a lot of states'
pension reforms target new employees.
"The thing to keep in mind is the state to 'act now' to manage a
problem," Huh said. "If they continue to kick the can down the road,
then it quickly becomes an unmanageable crisis for them. That's one
of the things to keep in mind. These small reforms right now may not
produce immediate results (but) will pay off in the long run."
Senate Bill 0030 could stop benefits for future legislators who
become part of the General Assembly after July 2011. State Sen.
Chris Lauzen, R-Aurora, introduced the measure.
"I think that the place that all that reform needs to start is
with the people who are passing the laws, the members of the General
Assembly," he said. "I don't think that teachers or state employees
or university retirement system are going to feel good about 118
state representatives and 59 state senators saying, 'You have to
live under one set of reforms, but our pensions -- our own pensions
--
oh, we're not going to do anything.'"
Sheila Weinberg, founder and CEO of the Institute for Truth in
Accounting, said that Lauzen's bill wouldn't be able to help the
current pension liabilities.
"What is going on now, each year legislators increase the liability
but then do not adequately fund the liability," Weinberg said.
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Ron Snell, senior fellow at National Conference of State
Legislatures, noted that some states -- such as California, Wyoming,
New Hampshire and Louisiana -- do not have pension plans for their
legislators.
"Some legislatures in other states have argued that it's a good
idea not to have legislatures voting on their own pension plan
because some people see that as a conflict of interests," said
Snell, whose research focuses on pensions and retirement issues.
Lauzen said pensions for lawmakers "incentivize people to stay
here forever."
Under the Illinois Constitution, cutting the pension benefits for
current General Assembly members is prohibited.
But Snell said that cutting incoming lawmakers' pensions won't be
enough to dent the fiscal woes of the pension system.
"There's not an enormous amount of money at question here because
there are a relatively small number of legislators when you compare
that number with state employees or teachers," Snell said. "So the
savings may be a good idea in principle -- that's for the legislature
to decide. But the numbers aren't going to make a big impact on the
overall funding situation."
[Illinois
Statehouse News; By MARY J. CRISTOBAL]
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