Letter: Public employees already paying for problem they didn't create

Published: Wednesday, July 5, 2017 9:10 a.m. CDT

To the Editor:

A recent guest column from Dan McCaleb describes newly enacted changes in Pennsylvania’s public pension plans that are designed to lower costs. The column concludes: “While Pennsylvania and other U.S. states address their fiscal problems, Illinois refuses to do so.” The clear implication is Illinois has not acted to reduce the future costs of its pension plans.

However, Mr. McCaleb has forgotten that in 2010 Illinois was one of the first states to reduce future pension benefits for new teachers and public workers to cut costs. The Illinois plan is more extreme than the new Pennsylvania law.

The “Tier II” benefit structure in Illinois reduced by 30 percent the value of a public pension for new hires after 2011. Tier II members will pay for the entire cost of their pensions. Tier II members must work seven years longer to be eligible for a pension and will receive smaller cost-of-living adjustments.

Illinois currently has an unfunded pension liability of $130 billion because the state has not once in 78 years fully funded its pension systems. As a result, this year $3.6 billion of the state’s $9.4 billion pension contribution covers the actual cost of benefits. The remaining $5.8 billion is for the unfunded liability.

The truth is Illinois has addressed one aspect of its fiscal problems. Tier II teachers and public employees are paying a steep price for a crushing burden built up over eight decades – a problem they did not create.

Richard W. Ingram

Executive director, Teachers’ Retirement System of the State of Illinois