Economic reality will sooner or later be forced upon Illinois state pensioners. I’ve been reading articles about the public employee pension crisis for well over a decade, and now that the rest of the economy has tanked, the issue is finally getting serious attention.
While we regularly ignore the federal Constitution — we’re supposed to believe that one sentence in the state constitution guaranteeing personal retirement benefits for public employees was chiseled on a stone tablet by the Hand of God and delivered to us by Moses.
As I’ve written — and it bears repeating and repeating — the practical application of this line from Article X is misunderstood:
SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
That 1970 Illinois Constitutional guarantee can only logically apply to a fully funded pension system. For one thing, just as one General Assembly cannot obligate a future General Assembly, future taxpayers are not obligated to make up the deficit of a pension fund created through the political failures of today.
For another, if it’s not funded, it stopped being a pension system and turned into an intergenerational wealth transfer system like Social Security. The Supreme Court has ruled that Social Security isn’t guaranteed, so good luck to you state pensioners arguing that future taxpayers — who weren’t a party to any contracts in the past – have to make up for the monstrous shortfall run up on your watch.
All this talk of a two-tiered pension system cracks me up too. Many dreamers pretend that we need only stop making stupid, unfulfillable promises and our troubles go away. Forgetaboutit. The first tier – the existing tier – is the problem. Any pensioner that is right now receiving above and beyond what the actuaries say is fair and appropriate under current funding levels is in effect stealing from future retirees.
Bill Zettler’s research and writing is must-read material for anyone who wants to learn just how bad the situation is today. Links to state and national news on the topic can be found at www.pensiontsunami.com.
Chris Edwards and Jagadeesh Gokhale of the Cato Institute have written that “The only good options are to cut benefits and move state and local retirement plans to a pre-funded basis with personal savings plans.” They’ve also said that the “underfunded” retirement plans are “more accurately referred” to as “over-promised.”
The Illinois State Constitution cannot guarantee the impossible. The sooner our political leaders deal with reality and scrap the whole system, the quicker we’ll get to a solution.