Here is McHenry County resident Scott Summers press release outlining his plan:
“Retire public pension plans,” Treasurer Candidate Says
Winding-down process would be spread over years
McHenry County, IL Sep 28, 2010 — Public pensions are in trouble.
Billions of dollars owed.
Billions of dollars short.
And no politician with a plan.
Except, perhaps, for one: the Illinois Green Party candidate for state treasurer.
Scott Summers is taking a stand. He says the time has come to unwind and exit most state and municipal pension programs.
“There’s simply too much systemic risk in public pensions,” Summers explains. “For decades, governors and legislators alike have simultaneously sweetened and shorted the plans. Today, some of them are almost at the point of collapse.”
According to the nonprofit Civic Federation, Illinois state pensions are underfunded by over $60 billion. Municipal police and fire pensions also are unsound.
“We can’t go on this way,” asserts Summers, who is an attorney with a master’s degree in business.
“The time has come to retire – yes, retire – the pension plans.”
“Let’s be very clear. I’m not talking about repudiating pensions and walking away. And I’m not talking about wholesale liquidation, either.”
“We have to unwind the pensions thoughtfully and responsibly, over a period of years,” Summers continues. “I want to meet our obligations as best we can, while simultaneously protecting taxpayers from the enormous financial liabilities we presently face due to past mistakes and mismanagement.”
Summers suggests approaches which are, at once, measured and nuanced. They include:
- Working with the federal government to move some beneficiaries into the Social Security system (as part of national public pension reform legislation)
- Moving some public plans and beneficiaries into “limited liquidation”, in the style of programs currently administered by the Pension Benefit Guaranty Corporation.
- Making retirement benefits portable for some current workers, and directing accruals to rollover IRAs (in lieu of future pension benefits)
- Moving some pension plan assets into trust funds for amortization and settlement, in the style of the 9/11 fund
- Structuring disability and survivor benefits for police/fire through commercial insurance programs
- Rehabilitating some state and municipal plans, and returning them to sound actuarial footing
- Compelling “pay as you go” state/municipal contributions to the winding down of existing plans, in the style and frequency of payroll tax withholdings
- Placing new hires in traditional Social Security and 401k/403b arrangements
- Converting annual benefit increases to indexes used by the Social Security Administration
- Levying state income taxes on pension benefits
- Ending “highest attained salary” predicates for calculating pension benefits
“Heath care benefits for state retirees also need to be restructured,” Summers believes. He proposes a shift to high deductible major medical plans, coupled with health savings accounts (HSAs).
Summers is not dissuaded by the controversial nature of his suggestions. He expects – indeed, welcomes – litigation as a method of settling the issues.
“Distinguished lawyers differ on the constitutionality of making changes to the pensions,” he notes. “Let’s get the guidance of the courts.”
Ever a pragmatist, Summers melds courage with candor.
“What I’m suggesting is far from ideal. It’s what I call the ‘least-worst’ alternative.”
“Consider the extremes,” he continues. “Run the pensions down to nothing? Or burden all of Illinois with massive service cuts and debilitating tax increases?”
“If elected as state treasurer, I’ll strive to save what’s left. I’ll work to minimize the pain for pensioners and taxpayers alike.”
“And I’ll work as hard as I can to get us out of the public pension business. Altogether.”
Scott Summers is an attorney with a master’s degree in business administration. He also is an author (two books published by the American Bar Association) and former elected official (community college trustee). A longtime resident of far northern McHenry County, Summers is on the November 2010 ballot as the Green Party candidate for Illinois state treasurer. Learn more about his candidacy at www.SummersForTreasurer.org.
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Near the bottom of Summers’ suggested reforms is a three percent pension cut for current beneficiaries. That’s what happens when one imposes a three percent income tax hike on retirement benefits.