Illinois House Speaker Michael Madigan finally weighed in yesterday on pension reform, offering a proposal that will surely become the front runner. It already won approval today from the House Personnel and Pensions Committee. Cuts to pensioners — and there are some — largely mirror those in the earlier Nekritz-Biss proposal. Details are in the Reuters article here.


Overall, it’s as bad as we should have expected.  First, like Nekritz-Biss, it does not reduce pension liabilities enough.  While a full analysis of pensions savings has not yet been made, those savings likely will be similar to those offered under Nekritz-Biss — about $35 billion would be shaved off the unfunded liabilities of four of the five state-guarantied pension funds.  The official unfunded liability is about $100 billion, but the real number is probably twice that.  Illinois will still be broke, for the same reasons Eden Martin earlier outlined.


Those savings could be seen as a small but useful first step, except for the pernicious “guaranty” provisions that appeared in other bills and are still stronger under Madigan’s proposal.  Under those provisions, courts will seize any cash needed to fund the pensions.  No discretion will be left for the state instead to fund education, DCFS, roads, police, whatever.  Only certain bonds will have a senior payment priority.


The guaranty provisions could only be changed if both legislative houses and the governor so approved.  In other words, tax dollars will be committed irrevocably to pension payments unless both houses and the governor’s office are replaced by people willing to stand up to municipal unions and vote against their own interest in their pensions.  Not likely, to put it mildly, so genuine reforms at some later date will be all but impossible.  Taxpayers will be forced to maintain the same corrupt, opaque “undefined contribution plans,” as they should properly be called, that turn the state budget into a roulette wheel.


More shrewd than his colleagues, Madigan has made the guaranty language far clearer than in earlier reform proposals.  Earlier ones were so vaguely drafted that one had to wonder if they were intended to be stricken by a court.  Now, we will have only the slim hope that Governor Quinn will use his line item veto power to remove the guaranties.


Make no mistake:  This proposal amounts to those in government permanently prioritizing their pensions over any other state obligations or functions. They’re dividing up the state’s body parts among themselves. But what would you expect, when the negotiation is among pension-holding legislators and pension-holding union bosses, with disputes to be resolved by pension-holding judges?


The buck will be passed.  The massive unfunded liabilities will be pushed to future taxpayers and our kids.  The name for this should be Stick it to the Kids.


Especially sickening is the media’s continuing failure.  “Comprehensive” pension reform they regularly call it.  Blind acceptance of the state’s phoney numbers.  Indifference to the implications of the guaranty provision.


These days will live in infamy in Illinois history.


UPDATE 5/2/11 The Illinois House passed this bill. No actuarial analysis has still been done so nobody who voted for it really knows how much it will save.  Governor Quinn, nevertheless, hails it as “comprehensive.”


Mark Glennon

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7 years ago

Also, the judges are not covered by this proposal.

Mark Glennon
7 years ago
Reply to  IndependentOne

Yes, I realize the judges’ pension is not part of this. They were left out in part so it could be claimed the judges can be impartial. I do not buy that because whatever they rule will be precedent for their own pension and will impact the state’s ability to fund their own pension. They will not be impartial.

7 years ago

Great article and great site. You collect all the right stuff about what’s really killing Illinois. But watch those typos and proofreading.

7 years ago

Ty Fahner was right. Its unfixable.