By: Mark Glennon*
Roberta Lynch is executive director of AFSCME Council 31, a union representing 100,000 active and retired public workers in Illinois.
In a Crain’s opinion piece this week she makes her case why the solution to our pension crisis is just a “funding problem needing a funding solution.” The answer, in other words, is just more money from taxpayers.
Her article is brazenly dishonest. She says:
“Illinois public pensions are modest: just $34,084 for the average state employee retiring on the standard formula, according to the retirement system’s latest annual report, and $34,413 for retirees in the Chicago municipal fund who aren’t eligible for Social Security.”
That’s hogwash constantly repeated by public unions. Annual pension benefits are typically over twice that.
First, the averages Lynch used are meaningless because they include part-time workers and, most importantly, those who worked far less than a full career to earn their pension. Pension benefits vest for state employees who leave after as little as five years of service. They also will get whatever retirement benefits are offered in the other jobs they hold over the course of their lives. Lynch ignores those other benefits
You have to look at full career benefits. We will be generous here and call “full career” just 30 years or more of service. Here are the true average, annual pensions for workers recently retiring since 1/1/14 with 30 or more years of service for the largest state-sponsored pensions:
You can find similar averages confirmed in the annual actuarial and financial reports for each pension fund (see note below for more information).
Lynch cites Chicago’s municipal pension, MEABF, as another example. Average pensions there are $34,413 per year, she says. Dishonest, again for the same reasons. MEABF workers retiring now with 30 or more years of service get $63,420 per year, according to its actuarial report.
As you can see, the real average pensions are about twice what Lynch claims.
Second, Lynch is very misleading about Social Security in that quote above. It’s true that MEABF and most other state and local pensioners in Illinois don’t get Social Security. However, over 96% of SERS pensioners do, which is why their average pension is lower. Most pensioners in IMRF, which is for municipal employees, also get Social Security.
Another whopper in Lynch’s article is why she says we couldn’t amend the state constitution to permit real pension reform. That would be “illegal,” she says, because it would violate the U.S. Constitution’s prohibition on impairment of contracts. Note that she says that without qualification, as other public union representatives often do. No ifs, ands or buts about it, she’d have you believe.
That’s bunk, as we’ve long told you. Just this month, a Rhode Island court, applying federal law on that exact issue, said pensions can be cut. Even if a court concludes that a contract was substantially impaired, “the court then must inquire whether the impairment, nonetheless, is reasonable and necessary to fulfill an important public purpose.” That was already well-established in federal law. Previous rulings by Illinois courts applying Illinois law won’t matter. Cutting cost-of-living benefits met that test in Rhode Island’s case.
Many Illinois municipalities are far past meeting that test. If the state itself isn’t there yet, it sure will be by the time this ever gets to the courts.
As for other answers to Lynch’s claim that the pension crisis is only about more taxpayer money, I won’t try to summarize the many dozens of articles we’ve written about the need for reform. Our pension system is fundamentally broken, corrupt and unsustainable. Illinoisans will never be able to afford what it will cost to honor them in full.
The impossibly deep hole deepens every day thanks, in part, to dishonesty about pensions spread by public unions.
*Mark Glennon is founder of Wirepoints.
Read more about Illinois’ pension crisis:
- Beyond Harvey: Many Illinois municipalities running out of options
- Rhode Island Supreme Court Shows Illinois The Way On Pension Reform
Illinois governor disregards state actuaries to claim “balanced” budget
- Illinois state pensions: Overpromised, not underfunded
- Pritzker repeats Illinois politicians’ favorite lie – Our monthly Crain’s article
Note: Wirepoints’ data averages all pension who retired within the last four years and have 30 years or more of service. The pension funds’ actuarial reports show annual pension benefit data based on the members who retired each year, grouped by years of service.