Voters to weigh amendment on state pension hikes
SPRINGFIELD – After a period of dire warnings and scandal, voters will decide next month whether to change the Illinois Constitution so that it's harder to improve retirement benefits for public employees. The amendment would require a three-fifths vote instead of a simple majority when legislators want to increase retirement benefits.
Illinois pension systems are in a financial mess, and some critics say legislators too often grant better benefits without worrying about the cost. The amendment is supposed to encourage consensus and keep the majority party from ramming a bill through the Legislature. But it's not clear how much the amendment could help.
The concept is simple, but it still raises plenty of questions:
Q: What prompted the idea of an amendment?
A: Illinois retirement systems don't have the money they'll ultimately need for pensions. Officials are trying to come up with a plan to reduce that shortfall without taking much-needed money away from other state services, but they haven't reached a deal yet. While that wrangling continues, many legislators see pension increases as a problem they can address, or at least give voters a chance to address.
The benefits issue also is getting attention because of special deals given to well-connected people, such as two union lobbyists who qualified for teachers' pensions after spending just one day as substitute teachers.
Q: How many votes would it take to pass a pension increase?
A: It would take 36 votes in the state Senate, up from 30. In the House, it would take 71, up from 60. To the consternation of public employee unions, cutting benefits would require just a simple majority.
Q: Would this amendment have blocked previous pension increases?
A: Not often. Generally, pension legislation passes by overwhelming margins.
Q: Are benefit increases a big part of the state's pension problem?
A: No. Pension sweeteners accounted for only 9 percent of the huge growth in the retirement systems' shortfall from 1996 to 2011, according to a report by the Legislature's Commission on Government Forecasting and Accountability. Insufficient employer contributions — that is, state government not paying its required share — caused 44 percent of the growth. Poor investment returns are another big factor.
Q: Would the amendment have any effect outside the state Capitol?
A: Yes. In addition to raising the vote requirement in the Legislature, it raises the requirement for city councils, school boards and other public bodies to pass anything that would increase pension costs, aside from higher wages.
For example, if a school board decided to offer teachers a financial incentive tied to performance, that would increase the size of the pension checks those teachers get when they retire. So the incentive plan would need a three-fifths vote to be approved. Critics say this invites a storm of lawsuits over exactly which changes would be covered by the amendment and which wouldn't.
Q: What kind of problems do the retirement systems face?
A: Basically, they have the money on hand to pay out billions of dollars in pension checks over the next few decades. There's no danger that pension checks will stop going out anytime soon, but at some point the retirement systems will need that money.
The money available now covers only 43 percent of what is owed in the long run, the worst funding level in the country. Making up that shortfall costs the state billions of dollars each year, which leaves precious little money to cover rising costs in other programs.
Q: What will it take for the amendment to pass?
A: There are two ways an amendment can get enough votes to be added to the state constitution. It can get "yes" votes from at least three-fifths of the people voting on the amendment itself or it can be approved by a majority of everyone voting in the election overall.
Secretary of state pamphlet explaining amendment (pdf): http://bit.ly/UMyQgf