Editorial: Don't let opportunity for pension reform slip by
The election is over. The holidays will soon be over. In a week's time, legislators will head back to Springfield for a lame-duck session that should have pension reform as its No. 1 priority. No more excuses or delays.
To that end, two suburban Democrats are leading the charge on a bill that provides the framework for a viable compromise at fixing the broken pension system — a conclusion bolstered late last week by actuarial analyses produced independently by the state's three major pension systems.
Some of their key conclusions: House Bill 6258 would immediately cut the state's pension debt by 29 percent. The bill would trim next year's pension obligation for the state by more than $2 billion. Its trade-off is a worrisome shift of pension obligations to local schools and agencies, but the analyses found that even that provision could be less onerous than previously expected. These are ideas that demand to be seriously reviewed.
Today, we begin a series of editorials looking at the hard choices that all stakeholders need to make in order to wrench the state out of the pension crisis that has made Illinois one of the least financially stable in the country. The urgency of this problem cannot be overstated, and we recognize that, under certain circumstances, it may even call for a solution during the impending Jan. 3 lame duck session, an action we do not warm to easily. But we can warm to it. Why? Here's one good reason: The state's $96 billion pension debt is climbing by millions of dollars each month. Here's another: When Moody's Investors Services downgraded Illinois' credit outlook to negative this month, a key factor was the state's “severe pension funding shortfall,” and Moody's warned that Illinois' rating could fall further if reforms are not enacted.
House Bill 6258 is an appealing answer. It's not perfect. But its authors, Democratic state Reps. Elaine Nekritz of Northbrook and Daniel Biss of Evanston, have been working hard with their colleagues and other stakeholders to massage the imperfections in hopes of getting approval by Jan. 9.
Will their work pass muster in court? That's one of the main debatable points. HB 6258 does involve benefit cuts and changes, and whether its approach can be reconciled with the state constitution deserves to be tested — as any approach that solves the pension crisis will be. But it also protects and guarantees secure pensions for teachers and others, a guarantee that stands in great jeopardy now.
The plan's controversial feature to shift payment responsibility for future teacher pensions — emphasize future; that $96 billion pension debt is still left to the state to resolve — to local schools needs attention, but the bill's phased-in approach negates fears that suburban residents, in particular, will face big tax hikes at a time when they can least afford them. At the same time, the bill places much of the cost control with the schools where it belongs — setting a minimum standard for pensions but leaving enhancements to be negotiated locally.
The proposal also makes sure state pension contributions are legally and specifically mandated annually and requires savings from the cost shift to be used only for reduction of the pension debt.
These are intriguing ideas. They've attracted truly bipartisan support — including from Arlington Heights Republican Rep. David Harris — and they represent an approach that requires contributions and cooperation from every sector. It may be, as representatives of a coalition of state labor unions urged last week, that a pension summit could improve upon them, and we'd certainly welcome that. But if it is to come, it should come soon — and it has to involve a greater willingness to compromise than the coalition's disappointing recommendations built primarily on increasing taxes.
HB 6258 provides a starting point for that kind of compromise. We hope lawmakers, legislative leaders and lawmakers in both houses are ready to roll up their sleeves and finish the job.