McHenry Times

In this week's newsletter, the focus is on pensions, a critical yet often overlooked issue in state government. Steven Reick, Republican Spokesman on the House Personnel & Pensions Committee, highlights the gravity of Illinois' pension crisis.

Reick notes that despite not securing the $130 billion needed to address unfunded pension liabilities this legislative session, some progress was made in stabilizing police and fire pensions. "Illinois’ public pensions are in shambles and are the worst funded in the nation," he states. Nearly 25% of general revenue is allocated to debt repayment, with local levels potentially higher.

The state administers five pension funds for various employee groups including state employees, university employees, teachers outside Chicago, judges, and lawmakers. The legislative pension fund is notably underfunded at around 22%, while the State University Retirement System has the highest funding ratio at only 45.2%.

A constitutional limitation in Illinois prevents reducing pension benefits for existing members. Article XIII, Section 5 explicitly states that benefits "shall not be diminished or impaired." This restriction necessitates a constitutional change before any modifications can be applied to current pensions.

Tier II pensions were introduced in 2010 to create a more sustainable system with modest benefits and longer vesting periods but apply only to new hires. Reick suggests even Tier II needs revision.

Local pension funds for police and firefighters are also struggling, forcing municipalities to raise property taxes or cut essential services like ambulance operations to meet their obligations. "With every local and state tax increase or fee increase, pressure to pay pension payments is likely a driving force," Reick explains.

A recent Wirepoints article criticized financial decisions underpinning these systems. It highlighted instances where retirees receive more than their working salaries due to loopholes allowing temporary salary boosts before retirement. Dennis Gannon's case exemplifies this: his $232,000 annual pension was inflated by being hired for one day by the city then granted indefinite leave until retirement at age 50.

Local governments face tough choices between cutting services or raising taxes due to unsustainable pension contributions. Reick emphasizes that resolving this issue requires statewide solutions and bipartisan cooperation.

Reick calls on taxpayers to demand reform as they ultimately bear the financial burden of unsolved pension problems. He acknowledges that many public servants rely on promised pensions but insists on establishing a sustainable system within fiscal limits.

Finally, he invites readers to explore McHenry County's summer attractions through his newsletter link.