As mediation starts this week, someone might want take a closer look at Illinois proposed pension reform legislation.
The bill might not pass there, but it might be worth using as a model in mediation here because it corrects a similar-sized unfunded liability in a way that seems less onerous on retirees without raising taxes in roughly the same period of time.
Although Illinois is the only state in the country with a pension plan in worse shape than our own, the proposed legislation there would only freeze COLAs for six years, according to the Chicago Tribune.
Among the key features of the House plan is a freeze on cost-of-living increases for all workers and retirees for as long as six years. Once the cost-of-living bumps resume, they would apply only to the first $25,000 of pensions. The inflation adjustments also would not be awarded until a person hits 67, a major departure public employees who have been allowed to retire much earlier in some cases and begin reaping the benefits of the annual increases immediately.
Of course, the devil is in the details, but it can’t hurt to give this a once-over. Also, it’s worth noting that we didn’t have to reform pensions in a fashion so impressive to the ALECs and Manhattan Institutes of the political worlds…
NPR did a really well-balanced story on Illinois’ pension reform efforts this weekend. Aside from having the two most unfunded state pension plans in the country, NPR points out another similarity with Rhode Island’s pension problems:
Over those many years, Illinois’ teachers, state troopers, university professors and other state employees have been paying their share, contributing about 8 to 12 percent out of every paycheck to their pension funds. But the state hasn’t.
They also included this pretty cool YouTube video Democratic Gov. Pat Quinn made: