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Tuesday, May 8, 2012

Your Daley Reminder: Fix Pensions Now, Not 'Later'

Legislators, don't plunge Illinois, too, into the Mariana Trench


Three weeks ago and half a world away, an American territory's retirement system became the first U.S. pension fund to file for bankruptcy protection. This shock wave rippled across the Pacific Ocean from the Northern Mariana Islands — with the pension system now proposing to slash benefits by more than half. The Wall Street Journal reports that government officials hadn't paid enough money into the fund, yet burdened it with costly pension perks. Sound like any politicians closer to where you live?

The Marianas haven't been a big story here since they hosted vicious battles during World War II, and the pension crisis didn't change that. Chicago news reports instead have focused on other revelations: exhaustive stories by the Tribune and WGN-TV about crafty collusion that left former Mayor Richard M. Daley and a slew of aldermen with fabulous pensions.

Taxpayers are furious. Check our email and you'd see how deeply this corruption — diabolical yet evidently legal —offends citizens writing fat pension checks to the pols. One Tribune reader, a state employee, synthesized the rising outcry:

The same people who failed to fund pension systems year after year created golden parachutes for themselves while crippling a retirement system for hundreds of thousands of people. The Illinois Constitution promised them a modest pension, and they paid in contributions sufficient to fund it — except for the criminal irresponsibility of these elected officials.

State lawmakers enabled these schemes, just as they enabled fat public pensions for other of their cronies — labor leaders included. But lawmakers also realize that voters have learned the secret passwords of government in this state: Stick around, play ball, keep quiet, and you're set until you die.

Faced with crises, especially in election years, Springfield incumbents tend to serve up sizzle but very little steak. Often the rest of us see legislators play tricks intended to divert our attention from scandals they don't want to address. In one hardy scam, the House and Senate pass different versions of a reform, but never reconcile their differences. Legislators can boast that they voted for the fix ... yet, as they intended, nothing changes.

A different ploy: Voters will be asked this fall whether to make it more difficult for Illinois governments to give pension sweeteners to public employees. Lawmakers hope you'll be impressed with this meager constitutional amendment — and overlook their mismanagement of a state pension system that's underfunded by some $83 billion.

But the disclosures about Daley and the aldermen make it harder for legislators to stall pension reforms. Repulsive as they are, these pension abuses are only one reason why Illinois funds face eventual doomsdays. But because they are repulsive, the abuses expose citizens to a more costly fiasco: the impossible math of trying to pay out all the future benefits that politicians have promised themselves, their cronies, and every retiree.

Judging by the anger washing over Illinois, many of those citizens also now realize who will be told to bail out pension systems that exhaust their assets: Illinois taxpayers, most of whom can't dream of retirements like those they endow for public workers. Given that rising awareness, this piddling constitutional amendment won't counterbalance what the Tribune and WGN exposed last week:

• Obscure provisions of Illinois law let Daley, who earned $17,500 a year as a legislator, now collect a General Assembly pension of $117,629 a year. His maneuvering also let him avoid more than $400,000 in pension contributions. His city of Chicago pension? That's an additional $66,149. Total: $183,778 as of his retirement last May.

• Twenty-one retired aldermen collect pensions averaging $81,000 a year. Compounded annual increases of 3 percent will, over their expected lifetimes, lift the average pension to $165,000 a year. The stories disclosed how one ex-alderman will, over the 30 years that pension fund actuaries expect him to live, collect $4.2 million. His contributions to the fund, plus expected investment returns, will cover $1.1 million of that. Taxpayers will cover the rest.

• For the 21 retirees, lifetime payouts will total $57 million. Their contributions and the expected investment returns will cover $19 million of that. Oh, and 53 more former or current aldermen are in the pipeline for similar largesse from the city's severely underfunded pension system — and its severely upset taxpayers.

As of today, we know of no Illinois public pension plan that contemplates filing for bankruptcy protection, and we hope none ever does. The recent disclosure by the Illinois Teachers' Retirement System that it may be forced to reduce benefits for pensioners is frightening enough — especially for a third of a million retired educators, their survivors and teachers now in Illinois classrooms.

Illinois lawmakers, decades of reckless decisions by you and your predecessors let the pension monster break out of your control. Everyone can see that it has turned on you. The only responsible thing you can do is tame it. Gov. Pat Quinn has offered a proposal to, over 30 years, eliminate that $83 billion shortfall and fully fund the state system. If you majority Democrats or minority Republicans have a better plan, pass it.

And bear in mind that, across the Pacific, alongside the Mariana Islands and 36,000 feet down, lies the deepest point of all the Earth's oceans.

What will it be, legislators? You can reform these pensions. Or you can plunge Illinois, too, into the Mariana Trench.

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