Opposition to the pension compromise legislation scheduled for a vote today primarily takes one of two forms -- either the legislation does too much or it does too little. Legitimate points can be made for each position, but the most important consideration regarding the pension bill is that it does something.
For those who believe the bill hammered out by the state's top legislative leaders goes too far, almost no response will be satisfying. From the beginning, this contingent, largely represented by teachers unions, has said that virtually any change in the existing system is an unwarranted reduction of benefits, and its solutions have always been predicated on increased revenues -- i.e., tax hikes. Similarly, for those who believe the bill does not exact enough concessions from public employees, about the only acceptable strategy is substantial if not total elimination of cost-of-living provisions accompanied by a complete overhaul of the pension system to a 401(k)-style system.
Time has shown us that neither of these approaches is viable, at least not for the near term. The 67 percent income tax increase approved in 2011 ostensibly to make headway on the pension problem has done nothing of the sort, and only the most wildly optimistic ideologues could realistically believe that employees who already are fighting even minimal adjustments to the retirement system will be easily persuaded or rebuffed into accepting a complete overhaul.
Meanwhile, the clock ticks, interest mounts at the rate of $5 million a day and the bonding agencies so critical to Illinois' ability to meet its obligations and maintain its infrastructure set interest rates with brutally cold detachment.
No one, not even this bill's most ardent supporters, will argue that the pension compromise is anything like an ideal solution to this complex problem. And without question, such a daunting challenge would benefit from at least a day or two of hearings on the proposed solution, as some have suggested.
The bill does, however, take meaningful action on the biggest drivers of the current crisis. It blunts the effect of the automatic 3 percent COLA for teachers that is costing the state more than $900 million a year. It sets a firm limit -- about $110,000 a year -- on the salary that can be used for determining pensions, thus both affecting most those who can afford it most and helping to avoid excessive payouts. It extends the age at which most employees can retire with full benefits. It places a firm requirement on the state to make its promised annual payments, and it sets a payment schedule that will have the system fully funded by 2045. It averts the so-called cost shift that would have moved pension obligations from the state to local districts and would have hit suburban schools especially hard.
These are not insignificant achievements. Still, we recognize that the bill producing them is not ideal. We share many concerns about, among other things, the degree of savings they produce and the continuation of guaranteed COLAs. But we also know that if this bill fails, nothing will improve. The possibility of reproducing an equivalent solution, much less one that is better, may not recur for years, if ever. That even this bill is destined for a lawsuit goes without saying, but that prospect is no deterrent. Any bill that truly addresses the problem will be challenged, and the sooner we can get answers from the courts, the better,
It would be wonderful if the pension reform legislation were a sort of Goldilocks solution -- neither asking too much nor doing too little. But such a "just right" middle ground will likely never be found on this issue. Instead, we are left with an imperfect solution that saves the state an estimated $130 billion or more over the next 30 years, protects the pension system, provides more stability for the state's very shaky financial condition and, for all its faults, can still be debated and modified over the years like any other legislation.
In a time of urgent need, such imperfection has to be superior to sustained inaction.