November 28, 2011

Cutting Pensions Would Lead to U. of I. Brain Drain

President Michael Hogan offered a thoughtful and well-reasoned argument for opposing Senate Bill 512.

By Michael J. Hogan
University of Illinois President

IT’S EASY to understand the Law of Unintended Consequences, the unanticipated and sometimes perverse effects of actions--sometimes government actions--that were ostensibly intended to provide a public good.

EXAMPLES OF this principle abound, but one that is often noted these days has to do with Senate Bill 512, now under discussion in Springfield, to fund the State's pension obligations to public employees. Leaders in Illinois public higher education worry that the proposed solution could have unintended consequences of substantial proportions. Their employees, many ineligible for Social Security, would have to accept diminished benefits or ante up significantly more to maintain the benefits they were promised.

THE LIKELY effect of Senate Bill 512 in its current form will be a brain drain from these public universities and their surrounding communities.

THE UNIVERSITY of Illinois is one of the largest and most productive employers in the State. Twenty percent of our workforce is pension-eligible and that includes some of our most distinguished faculty, physicians, and staff--many of whom would leave if onerous changes are made in the pension plan.

MAKE NO mistake about it, these outstanding and civic-minded employees have choices in a competitive market place not bound by geography. Those who leave may take their externally funded research projects worth millions of dollars with them and take their pension, too. Replacing these employees with comparable talent will be difficult so long as other universities are offering better benefits.

SUCH AN exodus would devastate our ability to meet the U of I's teaching, research, public service, and health care missions, and would slam the brakes on what has consistently been a vibrant economic engine for this great State.

AMONG THE top teaching and research universities in the world, the U of I and its three campuses directly and indirectly generates more than 150,000 jobs and more than $13 billion in economic impact for Illinois, a return of $17 for every $1 that the state invests in the U of I. We are the place that pioneered transistors, LED lighting, and MRI technology. We are the place that educated the founders of YouTube, PayPal and the NFL. None of this happens without great people. Entrepreneurial scientists pushing the boundaries of knowledge. Award-winning authors, artists and teachers, skilled health care professionals. Other universities in other states are hungry for this talent. We must work hard to retain them.

BUT THE proposed pension funding legislation will make it difficult to do that, and to recruit other highly professional faculty and staff. It will damage the public university system in Illinois, and in so doing, damage the State, as well.

AS WE contemplate the State's strategic advantages, how does it help in the long term to reduce funding for higher education, including two public Tier One research campuses, and provide substantially less compensation to its talented workforce?

WE KNOW that a solution to the pension problem is urgently needed, and we are willing to contribute our fair share to an equitable solution. But it needs to be based on the principles of equity and shared sacrifice, to which we can all contribute without doing great damage to the educational institutions central to the well being of our students and to the State's place in a knowledge-based economy.

I URGE legislators to consider the interests of our employees, the impact of their departure, and the threat that weakened public universities pose to the future of the State. The potential consequences are far too great to ignore.

(THIS ARTICLE originally appeared in the Chicago Sun-Times on Sunday, Oct. 30. Reprinted with permission of the Office of the University President.)

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