Local Democrats call for pension reform
February 4, 2013
Illinois needs to implement structural reforms in order to solve its pension problem, a group of local Democrats said at a town hall meeting Monday night.
State Sen. Daniel Biss (D-Evanston),Rep. Robyn Gabel (D-Evanston), Rep. Laura Fine (D-Glenview) and Cook County Commissioner Larry Suffredin jointly organized the town hall meeting that attracted more than 300 people to the Wilmette Community Recreation Center. The group supports Senate Bill 35 and House Bill 98, state pension reform legislation introduced this year.
At the beginning of Monday’s meeting, Biss gave an overview of the state pension debt, noting Illinois recently replaced California as the state with the worst financial condition. The state’s pension debt is estimated to reach nearly $400 billion by 2045, he said.
“For all discussion and hype around this issue, I’m not sure even today … we entirely appreciate the depth of this problem,” Biss said. “The Illinois pension system is really, by far, in worse shape than we see elsewhere in the country.”
Biss is one of two state senators co-sponsoring Senate Bill 35, and Gabel is one of 17 state representatives co-sponsoring House Bill 98, both of which outline comprehensive measures to reform the pension system. Among other things, the proposed reforms would require employees hired before 2011 to increase their pension contribution by 1 percent during the first year the legislation takes effect, and 2 percent thereafter. The bills would also increase employer contribution, requiring schools and universities to assume employer costs at a rate of 0.5 percent of payroll per year.
The reform would immediately reduce the state’s unfunded pension liability by $28 billion, Biss said, and reduce next year’s required pension contribution by 28 percent, or $1.9 billion.
Biss identified the state legislature’s past underpayment to the pension system as the biggest root cause of state pension problems. Biss proposed reforming the Illinois Constitution to enforce state payment to pension funds. Biss said his position has met opposition at the state capitol.
“The flexibility to not pay what you owe is a very convenient flexibility,” Biss said. “It’s the single largest cause why we’re here.”
Biss also proposed changing the pension formula to shelter the state from market volatility.
In addition, he proposed shifting the responsibility of pension payment to employers.
Monday’s town hall meeting attendees separated into two rooms, with elected officials coming in and out of rooms throughout the night.
Gabel and Suffredin emphasized the need to increase state revenues as a solution to pension problems. Gabel said she would work to create more jobs in Illinois because the largest sources of state revenue that could fund pensions are income and sales taxes.
Several public employees attending the meeting argued pension reform should focus on increasing state revenue rather than increasing employee contributions. Some proposed increasing the corporate tax rate or implementing progressive taxation. Biss said the best opportunity to discuss tax reform is when majority of the current state income tax increase expires at the end of next year.
Evanston resident and retiree John Heuman, who attended the meeting, said the Democrats speaking Monday sounded “reasonable.”
The proposed increase in employee contribution will discourage people from entering teaching, said Heuman, a past employee of a Park Ridge high school. However, he doubted the state would focus instead on increasing revenue.
“That’s not going to happen,” Heuman said. “Not in today’s climate.”