By: Chicago Tribune Editorial Board
January 6, 2012
“The realization that Illinois’ public pension system is broken — and gradually approaching broke — now has Illinois’ top Democratic leaders saying they’re determined to find solutions. Or maybe they sense that their management of state finances, with their pension debacle as Exhibit A, could have devastating consequences for their party in the November general election. Whatever the motive — we’ll all know soon enough — Illinois’ top Dems are edging away from their years-long strategy of delay and denial:
• House Speaker Michael Madigan aggravated union officials when, last year, he co-sponsored Minority Leader Tom Cross’ bill to reduce public pension benefits for current workers.
• On Monday, Senate President John Cullerton said he hopes to lower pension costs by negotiating changes with employee unions. That’s thin gruel given the unions’ demonstrated intransigence, but we wish Cullerton the luck of the Irish.
• And on Thursday, Gov. Pat Quinn signed the pension abuse bill that legislators passed last autumn. The law is one effort to block outrageous abuses disclosed by the Tribune and WGN-TV — labor officials who parlay their union salaries into fat public pensions, who claim public and union pensions for the same years of work and who even manage to qualify for teachers pensions by subbing in a classroom for … one day. Quinn also is about to name the members of a working group to address the unsustainability of the current pension scheme. His office says he very much wants fixes to be enacted this year.
Quinn deserves credit for signing the abuse bill as passed. Cross had introduced it in the House, Cullerton’s team toughened it in the Senate and Quinn had called for its passage. But organized labor’s busy mice didn’t let any of that deter them: Some insiders had hoped Quinn would use an amendatory veto to gut the bill — a mission they themselves had tried and failed to execute in Springfield. One reason for their attempted sabotage: Union officials have whispered their fears that the law could be used to claw back pension dollars the state system already has paid out to the cheaters.
We certainly hope those fears are realized and then some. We’ve hoped all along that federal, state and local law enforcement officials are probing the apparent frauds uncovered by Tribune and WGN reporters. City of Chicago pension officials who enabled some of the shenanigans that led to these huge payouts to well-connected labor bosses also deserve prosecutorial scrutiny
The eyeballing should extend to numerous Illinois lawmakers and other public officials, state and local. The U.S. attorney’s office in Chicago won’t discuss what it is or isn’t investigating. But former prosecutors in that office have discussed with us some intriguing avenues of inquiry. The gist of their thinking: Federal securities, revenue and pension codes discuss pension eligibility and the oversight of pension funds. Is anyone in these City Hall and Illinois cases guilty not just of moral corruption but of criminal conduct as well?
The most important consequences here probably need to come from voters. The Illinois political class for decades has used the giant pension funds as slush money to buy political fealty. Even if that deployment of public funds for private political gain didn’t break any laws, it ought to break political careers. We hope to learn more about who, exactly, tucked what into a conveniently murky pension code that runs to more than 1,000 pages.
The disclosures of recent months are a start, but only a start, toward exposing that quagmire. Which presents questions we hope Quinn, Cullerton and their colleagues will plumb as they mull revisions:
What else is in there? How many insider pension deals don’t we yet know about? If even a small fraction of the news tips provoked by this pension coverage prove out, your blood pressure is in for more surges. Rank-and-file workers who hope to collect pensions, as well as Illinois taxpayers who help fund them, deserve answers to that question. The looting of public pension funds puts both of those groups in grave peril. As does the egregious failure of politicians and union officials to insist through the recent decades that the state meet its funding obligations. Didn’t happen. Thursday’s issue of The Bond Buyer, a publication that tracks public finance, included a story headlined “Illinois Pensions in a Pickle.” Its opening paragraphs:
Illinois’ unfunded pension obligations grew by about $7 billion in fiscal 2011, but its funded ratio dipped just slightly to 43 percent from 45 percent, according to the state’s latest pension figures released Tuesday in the offering statement for its upcoming $800 million general obligation issue.
An income tax hike enacted in early 2011 that will raise $6.8 billion in new revenue annually helped ease the state’s cash flow and budget woes, but its unfunded pension obligations still pose a daunting challenge to efforts to stabilize its fiscal house. The state’s funded ratios were the lowest among states last year based on fiscal 2010 results. Got that? The pols who brought you an allegedly temporary income tax hike also have presided over yet another rise in your unfunded pension obligations.
Yes, with the bill Quinn signed Wednesday, the pols have given us an important tool against pension abuses, and for that we should be grateful. Thanks, Governor, for doing the right thing. The pols also want citizens to know that they appreciate Illinois taxpayers’ enormous pension funding gap, and they say they intend to find solutions.
As we said at the top: We’ll all know soon enough.”