A recent contributor to Viewpoints stated that Michael Madigan was the main culprit responsible for the Illinois financial mess [Madigan is the problem, not Rauner, Jack Crowe, Viewpoints, March 2]. In doing so, the writer ignored the contributions of previous Republican and Democratic governors.
Illinois pension woes date back nearly a century. However, today’s crisis took root under Governor Jim Thompson. In 1989 and 1990 the four-term Republican signed off on sprawling pension packages that granted generous cost-of-living allowances to retirees.
In 1994 Republican Governor Jim Edgar conceived of a 50-year program — “the Edgar Ramp” — to stabilize the state’s retirement systems. The governor’s goal was to have the five systems 90% funded by 2045. For the first 15 years, state payment levels were set artificially low, and then ramped up significantly in later years. The hope was that future leaders would somehow find the billions of dollars to make up for the deficits. In 2016-17 the ramp required a state contribution of $7.6 billion, one out of every four dollars in the state’s general fund. Some have described the Edgar Ramp as a “balloon payment on steroids.”
When in 2002 it became obvious that the Democrats would retake state government, then Republican governor George Ryan signed off on a lucrative exit package for thousands of state employees who got their start under Republican administrations. His plan gave them the option of speeding up their retirement by buying age and service credits. Eleven thousand employees took the offer at a cost of $2.3 billion.
In 2003, Democratic Governor Rod Blagojevich signed off on a $10 billion borrowing plan to give the state’s five pension funds new cash. The state owes $15 billion in principal and interest through 2033. However, the plan was an actuarial success in that the retirement systems investment returns varied from 8.43% to 9.25% whereas the original borrowing rate was 5.047%.
The successful plan raised the systems’ funded ratios from 49% to 61%. Unfortunately, the legislature used the good news to declare pension holidays in 2006 and 2007. One sponsor of the bill later acknowledged that he and his colleagues did not understand the cumulative impact of differing financial obligations into the future.
In December of 2013, Speaker Madigan crafted pension cutback legislation. He assured the legislature that it would pass constitutional muster. The legislation was signed by Democratic Governor Pat Quinn. The legislation supposedly would save $160 billion over 40 years by substantially reducing the pension benefits of retirees and current employees. In May of 2014 the State Supreme Court unanimously declared the legislation unconstitutional.
Last July, Governor Rauner proposed a plan that he said would save billions of dollars by reducing pension benefits and weakening labor unions. Little has changed.
There are well-known solutions to Illinois’ financial difficulties. However, they have been eschewed by both political parties because they require painful choices.
The great statesman Winston Churchill once remarked that Americans would always do the right thing … after they’ve tried everything else. It appears that Illinois legislators are not yet finished trying everything else.
Al Popowits is a resident of River Forest.