Recommendations Sent To Members Of
The First Conference Committee
On Senate Bill 1
August 2013

The main mission is to solve the fiscal crisis that exists in the State of Illinois, thus providing a more favorable climate for operation of state government and realize real savings with more favorable bond ratings.

It is essential that there be some new thinking “outside the box” to arrive at equitable solutions. Pensions are not the only problem as evidenced by unpaid and continual late payment of bills.

Guiding Principles:
Through the leadership of Illinois State Government there should be respect for state workers and honor past contributions and dedication of retirees to ensure a future work place that will entice younger individuals, at all levels, to pursue careers in public service.

Retirees and workers did not create the problem and shouldn’t be solely responsible for the solution.

For years the funds diverted from the retirement systems financed other services such as education, social services, infrastructure improvements and other services or projects to the benefit of all residents of the State of Illinois.

Pensions are not the only problem. At any one time, there are $6 to 10 billion due in unpaid bills, whereas, the pensions unfunded liability will be due over the next 40 years or so.

1) Guaranteed funding is most essential; however 100% funding is unrealistic and needed only in the event that all workers retiree at once, which will never happen. The pension debt should be amortized over a period of 40 to 50 years, to reach 70 to 80 percent of the unfunded liability with a uniform annual payment that would replace the current “back loaded’ schedule.

2) Examine each retirement system separately because each system is unique to the retirees covered by the system. One approach will not fit all systems. The funding schedule should be reviewed every five years.

3) Court rulings by the Illinois Supreme Court on the “pension clause” in the 1970 Illinois Constitution have concluded that accrued and vested pension benefits are constitutionally protected.

4) The entire state of Illinois’ population benefited from “pension holidays” and the State’s contribution shortages. Therefore, the current pension crisis should be borne by the entire state population—not just the state retirees and employees.

5) Projected savings from an unconstitutional law will most likely result in increased legal costs, deeper debt, and little or no savings or benefits.

6) Any savings from pension reform should be returned to the respective pension system and not spent elsewhere in the budget. Such restructuring should include level payments without a ramp and contain guarantees and recourses already suggested in proposed legislation. Ideas for dedicated revenue such as deposit of bond payments after maturity should be included in the funding resolution

7) Members of the Conference Committee should not be overwhelmed with the campaign on the part of some who are inclined to blame the State’s economic ills solely or heavily upon the public sector retirees. For example the average annuity for an SERS retiree is approximately $30,000.

**The above is the position statement of the Retired State Employees Association sent to the members of the Illinois General Assembly’s Conference Committee on Senate Bill 1.