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posted: 12/6/2012 5:00 AM

Editorial: Pension solution must address the issue of control

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The Daily Herald Editorial Board

State Rep. Elaine Nekritz is doing something all too few of her colleagues in Springfield appear willing to venture. The Northbrook Democrat keeps offering specific proposals for addressing the state's disastrous teacher and state employee pension system. And Wednesday two other suburban lawmakers -- Republican Reps. David Harris of Arlington Heights and Chris Nybo of Elmhurst -- signed on.

They all deserve acknowledgment for at least recognizing the urgency of the problem. "We can disagree on how we got here," Harris told the Daily Herald's Mike Riopell. "But we have to solve it."

The proposal they put forth isn't quite there yet, but -- addressing cost of living raises, employee contributions and the state's commitment to making required payments -- it certainly moves in a positive direction. It isn't truly comprehensive reform, but it is a multifaceted proposal.

Its biggest weakness -- and it's one that applies to nearly every proposal that has been floated so far -- is that it's not clear whether it addresses the fundamental systemic issue of letting the agencies responsible for paying retirement benefits influence what those benefits are. At best, it gives local agencies only minimal indirect control of some benefits.

That shortcoming, indeed, is evident across the whole spectrum of governments facing pension crises. They require local governments to pay the costs of retirements, but still let the state control the rules, an issue that the new Nekritz plan for teachers at best only partially addresses.

At present, the teacher pension system at least leaves the state with, as lawmakers themselves like to say, some "skin in the game." Supporters of the notion of shifting pension costs to local schools without also giving them authority over the rules should talk to Cook County Commissioner Bridget Gainer, who has been working for years to help Cook County gain control of its public employee pension system even though the county has been consistently meeting all its obligations to the plan.

Or, they should talk to village presidents like Gayle Smolinski of Roselle or Bill McLeod of Hoffman Estates or Al Larson of Schaumburg.

These community leaders, like their counterparts throughout the suburbs and the state, are overseeing pension programs involving police and firefighters that are utterly unsustainable. Smolinski fears the situation could devolve into a broader fiscal crisis in Roselle, which as a non-home rule community cannot simply impose tax hikes to make its increasing pension payments, in as few as four or five years.

The mayors, who in fact are working with a statewide coalition to bring attention to their plight, are proposing a slate of ideas the state could adopt to help them deal with their local dilemmas, and the specific ideas -- like those of Nekritz, Harris and Nybo in the proposal pitched Wednesday -- have specific merits. But the central issue at the root of all their problems isn't just the features of the system within which they must work. It's the fact that the system is imposed on them without the opportunity for them, or indeed the local unions with which they contract, to adapt their obligations and their agreements to their financial circumstances.

The cost shift proposal would -- in the name of giving local schools "skin in the game" of pensions -- take the skin out of the game for the state, much as it is for county and municipal governments. Nekritz and those who are working with her deserve credit for recognizing the urgency of the pension crisis facing the state and trying to do something about it. But until their proposals give those with skin in the game the ability to influence, if not set, the rules, they'll never create the level of pension reform that can permanently address the problems local governments and their employees face.

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