First off - I am possibly the last person in the world that ought to be suggesting solutions to the pension chaos in Illinois. I just want to make that clear. Don't get me wrong. It's not that I don't care about the issue. It's just that my eyes kind of glaze over when people start talking unfunded liabilities and COLAs. COLAs? Seriously, I'm thinking, "Why is Michael Bloomberg involved with this? He doesn't have enough to do in New York? He's gotta come here and mess up my soft drink consumption too?"
Right. COLA? I looked it up. My Big Gulp is safe for now.
Yeah, I'm kidding but the point is valid. The average citizen most likely understands what a cost of living increase is but when they hear a vague term like COLA, the idea becomes extricated from real meaning – disjointed and more unapproachable than it actually is…they may assume at first blush that it refers to some kitschy and intricate accounting term like SARBOX or FICA.
Do you know how many people in this country have no idea what FICA is…even though they pay into it with every paycheck? I think that's terribly significant to any financial discussion that the legislature might be having with constituents.
I know, for those who are knee deep in state budget debates, throwing around soulless acronyms amplifies how deeply embedded in the dialogue we really are. But when speaking in terms that are not immediately relevant to people with lives outside of politics, the issue takes on otherworldly qualities and average citizens often tune out. They come to believe that the solutions are best left to those who know how to handle the problem. This, by the way, is how we will ultimately move from a citizen legislature that is of the people, by the people and for the people to a political class which reigns over its serfs. Socialism thrives on acronyms and ambiguity.
Unfortunately, the real problem is that the powers that be don't particularly want to do anything about pension reform because the whole issue reeks if bureaucratic toxicity and may well prematurely end the political career of anyone who really attempts to fix this thing. My thinking is that leaders are kind of hoping that they can keep the matter inaccessible and incomprehensible to the average voter… at least until the whole system collapses – which ought to be right around the time that the Republicans regain control of the state at which time, the GOP can take the fall for the system's insolvency if they wish to remain true to form.
Either way, the spiritual mysticism of state budgeting plays well for those who would prefer to kick the can down the road and let someone else deal with it. If we want reform then the average citizen needs to care about pensions. If they don't, nothing will change.
Voters, for instance, need to be shown details that can be related to their own lives… that COLAs are part of the problem because pensioners are given automatic cost of living increases against a system that can fund less than half of the promised benefits, that pensioners are permitted to retire earlier than the age of eligibility for Social Security which keeps them drawing from the system longer…it's like take a penny, leave a penny. If everyone puts a penny in and too many recipients take a quarter out, the system doesn't work, right? Voters also need to know that any attempt to amend the pension agreements is met with a resounding "NO!" from union leaders. From their perspective, whatever agreement was in place at the time that an employee began his or her career cannot legally be modified.
Side note - This, I'm to understand, is not a wholly accurate viewpoint. Judges in Colorado and Minnesota have ruled that states may modify pension agreements. Rhode Island is currently testing that same theory as the state implements its reforms and reinstitutes solvency to a system that once rivaled Illinois in dysfunction.
Of course, we know that COLA is but a fraction of the whole problem. "Defined benefits vs. defined contribution" plays its role as well. You have a 401k and your company may match the funds that you put in for your retirement if you are lucky and have a good benefits package, but I'm guessing your company doesn't contribute more to your retirement than you do. Should retirement be a better deal for Illinois pensioners then? Especially since you are the one financing the plan? Should you be required to contribute more for a stranger's retirement than you do for your own?
I get it. It's not the fault of the pension recipients that they were promised more than what could be sustained. Understanding that they didn't make this problem doesn't make the problem go away. Chances are that you didn't make the problem either, but you're still being asked to bail the system out.
Look. This isn't rocket science unless we decide to make it so. Taxpayers need to be told over and over again that their children may not have access to extracurricular activities or smaller class sizes or art and music even though their tax bills are so high…and I'm only picking on teachers pensions because it is the largest of the state's 5 biggest systems. All the tax money that they believe ought to be paying for these programs is being used to shore up the pensions, and that still won't stop your property taxes from going up because we continue to demand the music and art and small class sizes that we thought we had already purchased. That's something thet will get the average citizen's attention because its messing up their kids' lives.
As Illinois Review readers well know, Andy Shaw's Better Government Association has been hot on the topic of pension reform for quite some time. He talked with Gina Raimondo who is the General Treasurer in the State of Rhode Island not too long ago about ways that Illinois might adopt her state's solutions to our state's growing pension problem. The video has already made its rounds but I thought it would be a good idea to revisit it and listen to what Raimondo has been doing to fix what was broken: