November 1, 2010

Pension Funding 'Will Get Worse Before it Gets Better'

A panel of experts discussed Illinois' pension problems Sept. 14.

FOUR PANELISTS tackled Illinois’ pension problems Sept. 14, and all agreed public pensions are the unmanageable factor in the State’s budget. The event was entitled "Public Policy, Politics and Pensions: Addressing Illinois' Desperate Fiscal Situation" and was co-sponsored by UIC United, the UIC chapter of the State Universities Annuitants Association, and the Academic Professional Advisory Committee.

UNDERFUNDING OF its five pension plans accounts for nearly half of the State’s $14 to $15 billion deficit, said R. Eden Martin, president of the Commercial Club of Chicago, at a forum sponsored by UIC United and the Academic Professional Advisory Committee.

“AND IT’S going to get a lot worse before it gets better,” he said.

HOW SERIOUS is the problem?

JOHN MCCARRON, contributing columnist for the Chicago Tribune, cited a story in Illinois Issues magazine arguing that pension issues are “one of the greatest financial challenges the State has ever faced” and threaten to reach a “tipping point” for a “fiscal slide into bankruptcy.”

HE NOTED that California’s unfunded liabilities are seven times as large as ours, but Martin responded, “California is also a lot bigger than we are.”

CUTTING THE overall budget is no answer, said panelist Ralph Martire, executive director of the Center for Tax and Budget Accountability. He noted that Illinois is 45th of the 50 states in what it spends on education, and ranks “at or near the bottom” in spending on human services.


“IT’S REALLY no issue,” Martire said. “We are one of the lowest-tax states in the nation. We need a tax increase.”

ILLINOIS POLITICIANS have been lying for 30 years by pretending that “we can have public services without paying for them,” he said. “Why don’t we stop buying the malarkey?”

BY RAISING the income tax three-to-five percent and hiking the sales tax, “we can solve a significant part of this problem,” Martire said.

ILLINOIS LAWMAKERS “have ignored the need for increased revenue with one exception, and used funds due the pension systems to pay current expenses,” said Addison Woodward, a member of the Illinois Board of Higher Education and former chair of psychology at Governors State University.

PENSIONS HAVE been reformed twice, he noted, yet each time that became “an excuse to use savings yet to be realized to offset current payments.”

MARTIN NOTED that Governor Pat Quinn is proposing a 1% increase in the State income tax, but said a 5% jump would be needed to overcome the gap created by underfunded pensions.

“IF WE continue to muddle along, the pension funds are going to run out of money starting in nine to ten years,” he warned.

MARTIN ADVOCATED a combination of pension reform and tax increases.

A MEMBER of the audience asked whether, given the present state of the economy, this is “a terrible time to raise taxes.”

NO, REPLIED Martire, adding, “The worst thing you can do during a recession is cut spending. That means less wages and salaries for public workers.”

McCARRON SAID the issue of public pensions, national in scope, is grist for anti-spending, anti-debt Tea Party enthusiasts.

“POLITICS WILL will be about who can harness [citizens’] anger” as people face “a future of less for their children,” McCarron said.

WITH MORE than 165 attendees at the event, extra chairs had to be added to accommodate the overflow crowd. Close to 70 participated via live webcast. UIC United Program Director Donna Knutson, Social Director Rose Kirk, and APAC’s Jacquie Berger arranged the event, and to UIC United Past President Irv Miller moderated the discussion. 

AN ARCHIVED video of the program may be viewed here. UIC United’s Jim Limber produced the video. Eden Martin's PowerPoint presentation may be viewed here, and Ralph Martire's presentation may be viewed here

--Gary Wisby, UIC News,; William S. Bike also contributed to this article

No comments:

Post a Comment