Pritzker defends plan that includes pension holiday
Gov. J.B. Pritzker is defending his proposal to address the state’s $134 billion unfunded pension liability.
Pritzker’s proposal for the coming budget restructures pension payments and pays less than what’s required in the coming years.
Despite critics, including some unions and Democrats, opposing the governor’s pension proposal seeing it as the state again kicking the can down the road, state Rep. Robert Markwick, D-Chicago, is on board.
“We’re going to put together a package that redefines this pension debt problem, shows a plan to pay it off and does not burden further generations but rather spreads the burden out so that one generation does not bear the full responsibility of facing a problem that they didn’t create,” Martwick said.
Pritzker said Tuesday the plan includes shifting the value of the James R. Thompson Center, a state-owned property in Chicago lawmakers have budgeted the sale of for years despite it never being sold, to the state’s pension funds.
“And by doing so, we’re increasing the asset base of the pension system,” Pritzker said, promising the state will sell the building eventually. “We’re doing that while we’re also doing pension buyouts.”
Pritzker wants to extend the pension buyout program that was passed last year. The program allows certain eligible employees and pensioners to get paid up front, instead of over a longer time period.
Dave Urbanek with the Illinois Teachers’ Retirement System, the state’s largest system, said after the sale of bonds last month, money for the program is now available.
“TRS is on track to begin paying the first participants in the Tier 1 accelerated benefit payment program in mid-May,” Urbanek said. “To date, we have 16 retiring Tier 1 members who have completed the process to participate in the program. Altogether, these 16 payments will total $1.3 million. The buyout program for inactive TRS members is set to begin in June when we notify all eligible inactive members of their ability to receive an accelerated benefit.”
Although Pritzker has said he wants to extend the program, not everyone is on board. Buyback proponent state Rep. Mark Batinick, R-Plainfield, has said the state should not overextend the program to ensure it’s a limited window that encourages more participation sooner.
Martwick said the overall plan spreads out the liability to other generations to keep pensions from crowding out government services for the current generation.
“Investments in infrastructure and quality social services, access to quality education,” Martwick said, “so, that’s the idea here.”
State Rep. Tony McCombie, R-Savannah, said she can understand plans to extend the funding ratio goal out, but she is opposed to paying less than required.
“Again, it’s just going to kick the can down the road,” McCombie said. “Not to keep using that phrase, but literally by not paying the $878 million for the next five years, some even say seven years, is ridiculous.”Pritzker said the state plans to put in $8.1 billion into the pension system. The bipartisan Commission on Government Forecasting and Accountability estimated the required payment for fiscal year 2020 should be a total of $9.2 billion.
The Illinois Retired Teachers Association has said delaying payments just kicks the can down the road again.
Illinois’ unfunded pension liability is $134 billion. Illinois’ overall state government retiree costs exceed $200 billion when other post-employment benefits are included.
Pritzker has refused to address what some Republicans have suggested as a solution: Changing the state constitution to reduce future benefit promises.