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Old 03-08-2019, 02:19 PM
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Mary Pat Campbell
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Join Date: Nov 2003
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ILLINOIS

https://www.chicagobusiness.com/joe-...ension-funding

Quote:
Union watchdogs don’t bark on pension funding
Organized labor ought to be more concerned than anybody about stabilizing state pension funds. So why do union leaders keep acquiescing as pols kick the funding can down the road?

Spoiler:
Public-sector unions in Illinois do a halfway decent job for their members on pensions.

The half they do well involves securing generous pension promises from politicians who need union votes. Political clout and aggressive litigation by unions have all but ensured that benefit cuts won’t be part of any solution to Illinois’ pension funding crisis.

Where unions fall short is making sure state employee pension funds will have enough money to honor those promises. They’ve acquiesced as successive governors and legislative leaders created the funding crisis by shortchanging pension plans by tens of billions over three decades. As unions point out in debates over benefit levels, a big chunk of the state’s $130 billion pension funding gap can be traced to the state’s failure to make actuarially required contributions.

Yet we’ve heard not a peep of protest from public-sector unions as newly elected Gov. J.B. Pritzker carries on the can-kicking tradition of his predecessors. His proposed budget would shave $878 million from the annual state pension contribution in fiscal 2020 and further weaken employee retirement plans by giving the state an extra seven years to meet its funding target of 90 percent.


Pritzker’s plan adds more risk to pension funds that have only 40 percent of the money they need to meet future payment obligations to retirees. Reducing current contributions and extending the “ramp” to full funding allows the gap to grow, because the pension plans will have fewer assets generating returns. What’s more, Pritzker’s longer-term ideas for funding pensions hinge on vague plans to transfer state-owned assets and a graduated income tax that couldn’t be enacted without supermajority approval of a constitutional amendment by legislators and voters—a lengthy and uncertain process.

Financial experts say Illinois should contribute more to the pension funds now, not less. The Civic Committee of the Commercial Club of Chicago—not exactly a mouthpiece for organized labor—called publicly for dramatic increases in pension funding. The Chicago business group proposed pumping an extra $2 billion a year into pensions, funded by new taxes on services and retirement income.

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No such proposals have come from unions, which ought to be more concerned than anybody about stabilizing state pension funds so retired members get the benefits they were promised. Yet unions aren’t demanding billions in additional state contributions or proposing new revenue sources to fund pensions. Instead, they’re going along with a plan that increases the risk that pensioners won’t get paid. And that risk is real. Already, some state pension plans have had to sell off investments to raise money for current payments.

In response to my questions, four big state employee unions generally praised Pritzker for committing to full payment of promised benefits and vowed to scrutinize his funding proposals.

“We will work with the governor and members of the General Assembly to ensure that any pension funding proposal does not underfund the pension systems,” Illinois Education Association President Kathi Griffin said in a statement.

Her pledge would inspire more confidence if unions hadn’t let previous governors off the funding hook. IEA, along with the Service Employees International Union and the Illinois Federation of Teachers, signed off on former Gov. Rod Blagojevich’s two-year “holiday” from pension contributions. Unions also stood by in the 1990s when then-Gov. Jim Edgar and legislators hatched a funding schedule that kept state contributions artificially low for 15 years.

If unions had used their political muscle against those schemes, their members’ retirement plans would be in better shape today. It’s time they found their voice on pension funding.


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