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PUBLIC EMPLOYMENT RETIREES
|As I write this message, the prospects for
passage of legislation that would diminish the pension benefits
earned by public retirees is uncertain. The Governor and others have
been promoting the passage of such harmful legislation. Hopefully,
they will approve a solution to the State’s budget problems that
does not include a reduction in the pension benefits of public
While the Legislature and the Governor have struggled with various
aspects of legislation and the timing for voting on it, they have
thus far seemed focused on the “choice” as a means for fixing the
pension unfunded liability. This will result in a diminishment of
retiree pension benefits to solve a problem that was not caused by
We continue to believe that the correction of the pension unfunded
liability problem can be accomplished without reducing the current
pension benefits of retirees. An example is House Bill 6204.
The campaign against public employment retirees
has been well crafted and well funded by private sector groups
like the Commercial Club of Chicago, its Civic Committee, and
Chicago’s Civic Federation. In addition, they have been strongly
supported by the Chicago Tribune and the Gatehouse Publishing
Company. There clearly has not been a balanced presentation of
information in the media. And, on multiple occasions, the
information has been either exaggerated or incorrect.
Organizations like the Commercial Club of Chicago, its Civic
Committee, and Chicago’s Civic Federation are made up of
representatives from large corporations. They know how to market
ideas, whether valid or not, in order to influence the thinking of
the public. And, although they continually spend money to influence
Legislators and Governors for corporate tax benefits and grants,
they do not want to pay taxes needed to support the State’s
increasing budget costs.
A current theme in the attack on public retirees is that the
cost of retirement benefits may soon exceed the
costs the State pays for education. I haven’t seen anything
that explains the numbers used for this comparison. However, it
seems a more fair comparison would be to compare only the cost of
retirement benefits of retirees within a given service area, such as
education, to the costs the State pays for that service area.
Another theme in marketing the idea that public retirement benefits
should be diminished are the statements that
paying these benefits takes away from services to the public,
i.e. taxpayers, such as education for children, roads, treatment for
the disabled, and public safety. The truth is that retirees are the
ones who have provided these services during their work lives.
Assuming all these services have been beneficial to the public, then
retirees as a group should be recognized and commended for their
service rather than denigrated and targeted for a reduction of the
benefits they were offered in exchange for their time and skills.
Another theme is the comment that these severe reductions in
retirement benefits are necessary to
“stabilize” the retirement systems in order to assure that
sufficient assets will be available to pay the benefits of future
retirees. Short of the State continuing to withhold
significant amounts of money from the retirement systems, this
appears to be another exaggeration or misrepresentation of facts.
I have been told by a knowledgeable source that there is no real
danger of the retirement systems running out of money. The real
concern of the Legislators and the Governor is that the State’s
budget problems are resulting in increased costs to borrow money.
This is money they want to borrow in order to spend more in the
future and to pay for services they have already provided to the
Over time, the Legislators and Governors chose
to spend money without assuring there was adequate funding,
including sufficient taxes, to pay for the services and projects.
These included the many services needed by the public as well as
projects of interest to the Legislators and Governors. They were
able to do this in part by not appropriating the required State
payment to the retirement systems.
Now, they seek to “fix” the shortfall in the State’s budget revenue
by diminishing the retirement benefits of public retirees rather
than adopting new or increased revenue options. What has been
characterized and labeled as a need for “pension reform” would more
accurately be described as a need for “funding reform” or “revenue
Retirees did not cause the “unfunded liability” budget problem. They
provided the service they were asked to provide. They contributed
financially and timely to their respective retirement systems as
required by the laws passed by the Legislators and Governors of the