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posted: 2/4/2013 5:00 AM

'Killing' state pension systems no solution

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In a recent letter to the Daily Herald, A. Perch of Mundelein became the latest of a large number of people to suggest that the state of Illinois declare bankruptcy as a solution to the ongoing financial problems being faced by the state's public pension systems, including Teachers' Retirement System.

While bankruptcy is a solution that is available to the private sector, this option is not available to the state of Illinois. The United States Constitution grants all states "sovereign immunity," which prevents each state from being sued for failure to pay a debt. Since state government already cannot be sued, there is no reason to go to court for legal bankruptcy protection, or to restructure its debts. Municipal governments can declare bankruptcy; but state governments cannot.

The letter also suggested that the state "kill" the five public pension systems and "turn them over" to the federal government's Pension Benefit Guarantee Corp. The PBGC, however, has authority only over private pension plans. It has no authority over government-run pension plans.

Finally, "killing" the pension systems does not relieve the state from paying all retirement benefits already earned by public employees who have steadily contributed a part of their salaries toward the system. Rather than look for ways to dodge our obligations, it would be more productive to engage in the hard debate about the changes necessary to meet them.

Dick Ingram

Executive director

Teachers' Retirement System

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