Harmon: Philosophical differences drive pension debate

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By Anna Lothson

Staff Reporter

State Sen. Don Harmon addressed a roomful of constituents last week about what he called "the elephant in the room," better known as the Illinois pension debate.

Harmon (D-39th) spoke bluntly about the issue that has been making headlines statewide and said many key elements of the debate should not be labeled as a "crisis" but as a fundamental difference in how lawmakers approach the state's budget problems.

"Everything has been clouded by pensions," Harmon said at a town hall meeting, June 28.

The political gridlock, Harmon said, boils down to a philosophical difference of opinion on how to make up for mistakes made by the Illinois legislature during the past 50 years (particularly the mid-1990s) that left pension obligations unfunded.

But it's a reality the current legislative body must deal with instead of kicking the can down the road, Harmon said.

Based on media reports, he added, it would appear the "pension crisis," as it's been labeled, is unsolvable and that the "sky is falling." Tough conversations remain for lawmakers, he emphasized, but change is achievable.

"We have never missed a pension payment. I don't believe we ever will," Harmon said. "We are not bankrupt … but we can't fund core services because of unmet costs over the past half century. It's a budget problem, not a pension problem."

Harmon focused a portion of the meeting, held at the Carleton Hotel, on education and pension funding, pointing to graphs showing how the two have flipped over the years.

As the state is forced to spend less and less on education because of budget woes, pension obligations have risen dramatically, he said. But the $100 billion or so in unmet pensions has lawmakers stumped on how to move forward.

A history lesson about the state's pension issue was also provided, with Harmon focusing on 1995 when lawmakers said they "solved the pension problem." In reality, the group established a system that structurally unfunded pensions for a decade.

"They pushed it off for tomorrow and created a ramp," Harmon said.

A little more than a decade later the economy crashed.

"We had the perfect storm," he noted.

Illinois undertook its most comprehensive pension reform in 2010 but is playing catch up with past mistakes that can't be cleaned up quickly. Now it's up to the Illinois General Assembly to come up with a compromise, a decision that's supposed to be completed by July 9. Harmon called that date unrealistic, an "artificial deadline."

A bipartisan conference committee has been formed to address two senate bills currently on the table, but key differences in opinion between House Speaker Michael Madigan and Senate President John Cullerton have escalated the pension tension. The July 9 solution, requested by Governor Pat Quinn, won't happen, reiterated Harmon, pointing out that neither of the Senate proposals push the problem down the road. There are "hiccups" ahead but the problem will be solved, he said.

"In a humane way, we are trying to maintain paying pensions. We can solve this," Harmon said. "We're going to get through this. This is difficult water, but we're going to get through it."

The best approach now, he said, is the new committee, a fresh legislative approach to tackling the "principle and intellectual differences" between the two sides. Harmon said the General Assembly can't stand pat on pensions or pass "reform" without real solutions for long-term change.

"We need to get this done for the next fiscal year, but we need to get it done right. The sky won't fall in the next week," Harmon said. "We could solve it today. But it would create a ramp for those 10 years down the road."

Contact:
Email: anna@oakpark.com Twitter: @AnnaLothson

Reader Comments

21 Comments - Add Your Comment

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John Butch Murtagh from Oak Park, Illinois  

Posted: July 2nd, 2013 12:34 PM

Bridgett - I don't know the reason why, but all or close to all states have the responsibility for education funding and policy. I suspect it goes back a long time. One benefit is that school employees can move from state to state and have continuous pension coverage. I don't know how that works either.

Bridgett from Oak Park  

Posted: July 2nd, 2013 2:01 AM

@OPRF Achievment, the teachers union is a big voting block (and campaign donor) for politicians, aren't they? :-)

Done from Oak Park  

Posted: July 1st, 2013 8:50 AM

Alberg is on the right road. Short of another solution - 401K-type plans for all state employees hired after 1/1/14. State matches up to 3 percent. PROBLEM SOLVED! Harmon needs to go faster than you can say "Make the taxpayers cover the shortfall". We already covered our portion - the state didn't hold up their end of the pension bargain.

OPRF Achievement  

Posted: July 1st, 2013 6:38 AM

@ Bridgett -- excellent point you make. How did they get to do this, ask Sen Harmon. They voted to make it happen. You see, it is all an inside deal. Just do not tell the taxpayers, they don't focus on anything until right before elections. At least that is there thinking, and for the most part it has worked. The system can only work if the voter is dis connected and "Trusting". Sen Harmon is part of the problem in Springfield - not part of the solution. Keep calling him and his office!

Bridgett from Oak Park  

Posted: June 30th, 2013 8:41 PM

What's odd is that the schools can authorize these salary bumps right before retirement, yet they aren't the ones paying for it. It's the state of IL that pays for it. How did that setup happen? How did the State become the employer (responsible of paying pensions) of these teachers, when it's the school districts that hire them and pay them? If school districts had to pay the pensions, maybe we'd see salaries handled a little differently. It's easy to spend OPM (other people's money).

Ff  

Posted: June 30th, 2013 8:17 PM

so is 40% salary spikes. That too is theft. And it wasn't politicians in some other city. It happened here in Oak Park. Unfunded salary spikes that cost the state of IL and your Oak Park neighbors millions dollars. minimum 75 million for the OP "bump" that somehow some else would pay? Theft.

OPRF Achievement  

Posted: June 30th, 2013 8:05 PM

@Disgusted - totally agree about Harmon. What a complete Waste!. He doe NOT offer what needs to be done, as he either is Clueless, or has been told by his "bosses - Madigan and Cullerton" not to say anything that could possibly help to solve this. Either way - he is NOT serving us -- the people HE works for. I am confident HE needs to GO --- as he only helps keep the problems from getting solved. Anything to keep his cushy little Gov job. BTW - they should all be part time!!

gg from Finally Term Limits  

Posted: June 30th, 2013 7:02 PM

When the 500,000 teachers discover their pensions have been cut in half, I hope all of the politicians lose their jobs. Pension reduction is theft.

John Butch Murtagh from Oak Park, Illinois  

Posted: June 30th, 2013 1:50 PM

Excellent point, Jeff

Jeff Schroeder from Oak Park  

Posted: June 29th, 2013 10:13 PM

Under ERISA, the owners of companies (ie. executives and shareholders) are responsible for pension shortfalls (in the fullest sense). No such laws apply to our politicians, who may agree to unrealistic pension arrangements without any personal financial consequence. It ultimately falls to the taxpayers!

Alberg from Oak Park  

Posted: June 29th, 2013 2:34 PM

SOLUTION - Roll all government pensions into Social Security - one per person. Average the best 10 years of earnings instead of basing public pensions on the sweetheart raise of the last year. Provide the same health care benefits to government workers (including elected & appointed officials) as are provided to the public. Don't provide benefits to those who have not contributed. Take the Gambling Revenue and use it for schools, as promised. PROBLEM SOLVED!

Grinchbert  

Posted: June 29th, 2013 8:01 AM

Pay benefits through the life expectancies that were in place when the plans were set up (I.e., 10 years less than current actual life expectancies) and problem is solved. But somehow I don't think this union-laden state will do anything but screw you people and children so that greedy older people can live very comfortably in retirement.

Bridgett from Oak Park  

Posted: June 28th, 2013 11:01 PM

(CONT.)...may be unconstitutional, according to Article XIIII, Section 5 of the IL Constitution, which states that the State can't diminish or impair enforceable contractual benefits. I don't know if this is true, since wouldn't the Senate bill which addresses the COLA formula also "diminish" benefits? Why is one constitutional, and one not? I'm not totally clear on all this.

Bridgett from Oak Park  

Posted: June 28th, 2013 10:55 PM

Harmon said there are two very different bills being looked at--one in the House, which is harsh, and is set up similarly to the pension structure of employees hired after 2010, and similar rules as Social Security; and one in the Senate that is not as harsh, and doesn't save that much money, as it only addresses the current compound nature of how the COLA (cost of living adjustments) are paid. He also said that the harsher House bill... (CONT.)

Phil Morris from Smoke Park  

Posted: June 28th, 2013 9:56 PM

I have a simple resolution to the problem, everyone wins. Tie pensions to mandatory smoking.

John Butch Murtagh from Oak Park, Illinois  

Posted: June 28th, 2013 5:48 PM

Jeff - Great to be optimistic but the pension program has been in trouble for 15-20 years. The trend is that the amount of money owed is increasing faster than the legislators stop-gap measure. Having Harmon tried to make optimists out of rightful cynics is proof that there is no plan, no direction, and only steps away from bankruptcy. Need some transparency, here!

Jeff Schroeder from Oak Park  

Posted: June 28th, 2013 4:22 PM

To clarify, it is great that people are living longer, but it does mean that actuarial assumptions that once made these plans affordable have changed dramatically. There are no easy answers to the problem, but steps will have to be taken on a lot of different fronts, some which will be unpopular with employees, retirees and taxpayers alike!

Jeff Schroeder from Oak Park  

Posted: June 28th, 2013 4:19 PM

Many factors have contributed to the pension mess: compared with the Fifties, employees are living longer and retiring younger,there are lower rates of interest on invested pension funds, higher salaries used in calculation of pension benefits, failure of state and local governments to pay their share of cost over the years, etc. A complex problem that will need a lot of adjustments to the status quo.

muriel schnierow from OakPark  

Posted: June 28th, 2013 4:07 PM

Senator Harmon is dedicated to our welfare. these are complex problems without cooperative legislators and with entrenched power brokers. He needs grassroots support. i support him.Muriel

Paul Obis from Oak Park  

Posted: June 28th, 2013 3:59 PM

It doesn't seem like Harmon has any answers, just empty reassurances. To recap the Journal article: "Harmon said that neither of the Senate proposals toss the problem down the road. There are "hiccups" ahead but the problem will be solved, "In a humane way we are trying to maintain paying pensions. We can solve this, we're going to get through this. This is difficult but we're going to get through it." What a bunch of hot air.

Disgusted Illinoisian #4309  

Posted: June 28th, 2013 3:44 PM

Blah, blah, effin blah. The more I hear Sen. Harmon talk, the more I am philosophically opposed to having a state senator so beholden to his party bosses and union campaign funders and so opposed to real action on behalf of Illinois taxpayers in the name of poltiical entrenchment.

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