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TO FIX
ILLINOIS’ PENSION CRISIS, FIRST CHANGE ITS CONSTITUTION
Illinois Policy Institute/
Dylan Sharkey
Illinois allocates more of its budget to
pensions than any other state, but pension spending has only
skyrocketed. A constitutional amendment is the only way to reform the
state’s unsustainable and underfunded pension systems.
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 Daley College Professor Mike
Crenshaw is far from retirement, but he constantly worries whether the State
Universities Retirement System will be solvent for him.
“I have 20 years until I can retire, and my biggest fear is that the money’s not
going to be there,” Crenshaw said.
Since 2000, Illinois’ pension spending has grown by over 500%, compared to total
spending that grew by 15%, and it hasn’t solved the problem. SURS and the other
four statewide pension funds in 2021 had 40% or less of the funds they will
eventually need.
“My question has always been, ‘How is this sustainable? How can you possibly
keep this going at this rate of paying people this type of money?’”
It’s not sustainable. Payments to pensioners increase by 3%, compounded,
annually – a doubling every 20 years. As a result, Illinois dedicates more of
its budget to pensions than any other state, yet the five systems have grown a
$317 billion deficit by one estimate.
Because pension benefits are defined in the Illinois Constitution, only a
constitutional amendment approved by voters could change pension structures.
Amending the constitution would open the door to changing the compounding raises
to simple inflationary adjustments – protecting the systems for retirees and
ending the excessive drain on taxpayers.
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Crenshaw said he wishes
he could have the option of handling his own finances and
retirement. Because his money is tied up in SURS, he also can’t
touch it in case of an emergency.
“I just feel that as a
taxpayer, I should be able to decide when I give, and receive, my
money. Also, I should be able to decide whether I want to contribute
to a pension,” Crenshaw said. “I know how to budget my own finances
from month to month. That’s something that I teach in my classes.”
In 2013, lawmakers got behind the idea of pension reform, and passed
legislation reducing annual pension liabilities. The Illinois
Supreme Court ruled the law invalid because the Illinois
Constitution states public employee benefits cannot be diminished.
The law would’ve improved the chances of a funded retirement for
workers such as Crenshaw.
A constitutional amendment is the only path to reforming pensions
systems, specifically the 3% compounded annual increases. A “hold
harmless” pension reform plan developed by the Illinois Policy
Institute increases the funding requirement from 90% to 100%,
guaranteeing no empty promises for public employees.
Crenshaw wants change.
“I’m hopeful that someday my dream can come true of me actually
being able to spend my own money.” |
