Pension reforms: Fiscal stability and a promise (we hope) fulfilled

Opinion: Columns

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By Don Harmon

Editor's Note: Sen. Harmon submitted this commentary to Wednesday Journal on Monday, just before departing for Springfield. His submission prior to Tuesday's scheduled pension vote was, in his words, "borne of confidence that the General Assembly would finally act but tempered by the reality that stakeholders on both sides were working furiously to delay or derail the vote."

I've been assuring friends, neighbors and readers of Wednesday Journal for months that the General Assembly would soon tackle pension reform in a meaningful way. By the time you read this, I hope to be home from Springfield having helped pass a pension reform bill that will solve the crisis today and for all time.

I've also warned all who would listen that whatever pension reform bill we passed would not totally satisfy anyone and would anger stakeholders on both sides. On that point, I trust we have not disappointed.

But the fact is that reform now is critical to stabilizing our state's fiscal condition and freeing up resources for core functions, such as education, human services and public safety. Reform also will fulfill our promise to public workers that pensions will be there for them in retirement.

While I prefer the original Senate model supported by many public workers directly affected, the new compromise bill is clearly superior to our Senate proposal in one key measure. It is valued at about $160 billion — more than twice the value of the Senate proposal. 

Moreover, the new proposal has elements of fairness I admire.

First, we listened to retirees and teachers who implored us to contribute more state dollars to the pension systems instead of just cutting benefits. Unlike the severe House model, the new proposal achieves almost half of the $160 billion through additional state contributions.

Second, we recognize that those already retired, or preparing to retire soon, have less flexibility to adapt to changing rules, so more falls on younger workers who have time to plan. No employees over 45 will see changes in retirement ages. No current retirees will see a suspension in their cost of living adjustment (COLA).

Most of the savings on the benefit side come from a fundamental change in the COLA calculation. Today, employees receive an automatic, compounded 3 percent increase in their pensions each year, regardless of inflation. Those retired for the last decade have done well, with COLAs far outpacing inflation. That's not a sustainable system.

The new COLA calculation attempts to be fair to public workers. It acknowledges that teachers and most public employees are not entitled to Social Security and gives more to those who must live on their pension alone. The new COLA is tied to inflation, salary and length of service. In that way, it rewards those who have worked a full career for a modest salary over the political insiders who work a brief time at a high salary. Both may have a $35,000 pension, but the career teacher will enjoy a far more generous COLA. 

We've also ended several lingering abuses. We are capping the salary used to calculate pensions to discourage "salary spiking" at career end. We've ended the practice of using vacation and sick time to calculate pensions.

The legislation headed for a vote as of this writing is fairer and more constitutionally sound than the House plan rejected in the Senate last spring. While I have lingering doubts about its constitutionality, I am convinced that whatever we do as legislators, the only path to lasting pension reform runs through the Illinois Supreme Court.

This is not the plan I would have advanced were it up to me alone. Whatever our individual misgivings, however, we must move forward with genuine pension reform and I support this compromise measure.

It will be described as unfair by many and deemed inadequate by others. But it will get Illinois back on firmer financial footing while making room for other critical funding priorities and future initiatives. Of equal importance, and of particular importance to me, it ensures that public workers counting on pensions will be paid one for as long as they live.

State Sen. Don Harmon, a lifelong Oak Parker, is a Democrat representing the 39th Illinois Senate District. He is president pro tem of the Illinois Senate.

Reader Comments

9 Comments - Add Your Comment

Comment Policy

@Mann neighbor  

Posted: December 5th, 2013 8:21 AM

The max social security benefit, beginning at age 66, is about $23,000 per year. The avg pension check for OPRF retirees, starting as low as age 55, is in excess of $100,000. I'm sure that Muriel would trade her social security for a teacher pension. BTW, teachers, PLEASE start reining in your union leadership and teachers commenting here/elsewhere. Why? Because almost all of us value the work and effort that you give/gave and they just make you appear greedy and ignorant of reality.

QBERT  

Posted: December 5th, 2013 7:34 AM

Sen. Harmon did the right thing...and the best thing for all involved. Some, mostly union folks, continue to ignore the realities of the situation. The "I don't care what it costs the taxpayers, give me the money" attitude does not work anymore. The COLA has reaped huge windfalls to members (3% compounded v. 1.5% actual). Retired and close to retirement members are not affected at all or affected very little.

Mann neighbor  

Posted: December 5th, 2013 6:44 AM

Good for you, Muriel. And you will also receive social security benefits. Public employees will not since the state pension is their only plan .

muriel schnierow from Oak Park  

Posted: December 4th, 2013 11:16 PM

this is a personal response. i think Senator Harmon has navigated the waters in as good a fashion as was possible and i support this bill. a bit of personal history. in 22 years of business, as an independent contractor, i paid my own insurance, funded my own retirement, and my "pension" is based on savings, shrewd investments i hope , and really no help from anyone, not even fair pay in my first job.i do not resent this. we need Revenue.

Tom Moher from Oak Park  

Posted: December 4th, 2013 11:02 PM

Pure sophistry. I am a retired career educator. My COLA won't be "suspended," but it will be slashed by 90%, and in 20 years my purchasing power will be only 60% of what was guaranteed to me by the state constitution. Note that Senator Harmon's only hard numbers here are the amounts that the state has stolen from pensions, to which he points with pride. Senator, please have the decency to lay out the real facts of what you just voted for.

muntz  

Posted: December 4th, 2013 10:43 AM

What I find amusing is that union folks have always stated diminished benefits will lead to less qualified applicants and a lower quality workforce. Well, guess what's happening? The union members feeling the true pain are the newbies "who have time to plan." Where's the concern about the future workforce quality if the young union members have "diminished" benefits? None, of course, as the older folks keep their generous pensions. Where's the concern for our young teachers, almighty union?

The teachers got the shaft  

Posted: December 4th, 2013 12:41 AM

Rick do'nt cha know .. Don works for the rich folks. Who do ya thinks paying him? No cut in his 80% after ten year pension. No cut in the 200K judges pension. Only the 30K teacher. Ya Ya.

Rick  

Posted: December 3rd, 2013 11:52 PM

How about the legislators feel some of the "pain" for underfunding the pensions over the years? If a legislator has been serving 10 years, he gets a 10% cut on his pension, if they have been there 20 years they get a 20% cut, 30 years they get a 30% cut, 40 years a 40% cut etc. Someone who has been there 10 or more years has contributed to the problem and should bear the brunt of this pension problem!

Gail Moran from Oak Park, Illinois  

Posted: December 3rd, 2013 11:01 PM

Thank you for your letter. I'm not convinced, but its a good letter.

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