Illinois Pensions: State Sentor Pamela Althoff Says Illinois Pension Solution “Long-Term”

(Springfield, IL) — March 3, 2010. As Illinois lawmakers weigh how to fill in a budget deficit as deep as $12 billion, they may also consider changes to how retirement payments are made to state employees.

For years the state has underfunded its public employee pension systems. Recent estimates have put the debt owed to the state’s public employees — both working and retired — at $80 billion .

Administrators from the state’s retirement systems spoke to a legislative committee Tuesday evening on the importance of making consistent pension payments.

State Senator Pamela Althoff (R-Crystal Lake) said the state’s pension debt would be difficult to solve in one year.

“We’re going to have to look at it in the long-term and really have to be very vigilant in not eroding decisions we make this year and in better years decide we have more money to spend differently,” she said.

Eden Martin, president of the Civic Committee of The Commercial Club of Chicago, said the state’s continued unwillingness to pay off the pension debt would cause big problems.

“It’s going to squeeze out the schools, it’s going to squeeze out the universities, it’s going to squeeze out service to old folks in the hospitals, it’s going to squeeze out meals to the old folks in their homes and it’s going to squeeze out early childhood education and CTA service,” he said. “Everything’s going to be affected by it if we don’t get our arms around it. It’s bigger than anything else we’ve worried about.”

Lawmakers brought up a number of potential changes to the state’s pension systems, such as increasing the retirement age, capping annual payments to pensioners and abolishing mandated annual increases in payments.

One cost-cutting suggestion included instituting a two-tiered pension system, where incoming employees would have a reduced set of benefits compared to current retirees.

But Tim Blair, acting executive secretary of the organization overseeing three of the five state-funded retirement systems, said lawmakers needed to consider both the current pension debt and cost-cutting moves for the future.

“If we do the reforms and modernizations, that doesn’t relieve us of our funding responsibilities, as well. While I think things can be done for new hires, it’s going to take a long time for the savings to accrue to the retirement systems,” he said.

Lawmakers have struggled to make its full payment to the pension systems in recent years because of the economic recession.

Before the recession, lawmakers skipped pension payments and used the money for other uses.

Last year, lawmakers and Governor Pat Quinn approved of selling $3.5 billion in bonds to help make the state’s 2010 contribution to its pension systems.

The independent Pew Center on the States reported that Illinois ranked last out of all 50 states with the largest total unfunded pension liability.

State Senator Matt Murphy (R-Palatine) said juggling priorities would be difficult because of the state’s fiscal problems.

“We want to be fair to the employees, whether they are retirees now, current employees or future employees, there’s a desire to be fair. There’s also a desire to not bankrupt the state,” he said.

–Illinois Statehouse News