Remarks by Senate President John Cullerton at the RTAC Luncheon on October 6, 2011
Transcript provided by the RTAC lobbiest Dick Lockhart
Posted October 15, 2011

 I can imagine that given the onslaught of media coverage about pensions and so-called pension reform that you are all rightfully concerned about what the stateís politicians have in store for your pension checks. 

Let me be clear: your pensions are safe.  

The debate in Springfield is about whether pension benefits can be changed for existing government employees and current teachers going forward.  It does not involve those who are already retired so you can exhale now.  The proposals that seek to reduce benefits for current teachers are controversial enough. Any attempt to reduce pension benefits for those already retired would, in my view, never stand a chance of becoming law.  And my view is the entire idea of reducing pension benefits for existing employees is unconstitutional. My stance was re-affirmed by the voluminous research conducted by my chief legal counsel going back to the very debates that framed our 1970 state constitution.  It turns out the people who wrote our state constitution and included a very explicit pension protection did so because they envisioned the exact situation we find ourselves in today.  Turns out the pension systems werenít any better funded then than they are now. The pension protection was included to protect public pensions for fear the government would renege on its obligations in economic crisis.  In fact, before those protections were included, Illinois courts treated most public pensions as a gift from the general assembly that could be changed or revoked at any time, even after a public servant retired.   But thanks to those protections, the Illinois constitution bars the general assembly from unilaterally reducing the pension benefit rights of current employees as well as retirees. 

I would invite you all to visit our website, and read the research for yourselves. Weíve also included opposing viewpoints and legal arguments. But once you read them, I believe youíll quickly come to share my opinion that this much-hyped attempt at cutting pensions will be declared unconstitutional if it ever gets enough votes to pass.  But even if your pensions are safe, I would recommend you stay alert.  An election year is coming and pension benefits for those now teaching in your former schools and classrooms are under siege for two reasons.  First, the 2008 stock market crash placed our nation in a financial crisis, and caused state unfunded pension liabilities to skyrocket. Illinoisí State pension system is funded at 39% and has unfunded liabilities approaching $85 billion.  Second, the so-called pension reform push is not about the law, itís about political agendas and money. Eden Martin of Chicagoís commercial club candidly states, ďThis is not about the law at all, itís about the politics and arm-wrestling over money.Ē  Illinois just passed an income tax increase and that revenue will in part simply allow us to make our scheduled pension system contributions.  That means there is no pot of money to be spent elsewhere.  So after having created this crisis by failing to adequately fund pensions for decades, there are now those in the legislature who would succumb to political interests and use the man-made disaster as cover for their efforts to turn teachers and public employees into scapegoats.  That is the goal of SB512, the so-called pension reform bill pending in the Illinois house.  Let me be clear. If the house ever passes the proposal, I will vote against it. I wonít block a vote in the senate, but I will vote ďno.Ē And should it pass I believe it will ultimately be an exercise in political, legal and financial futility, out of which only the lawyers getting paid handsomely to handle the inevitable lawsuits will benefit.  However, the constitutional pension protections donít mean we canít do anything in regards to pension benefits.  In 2010, the Illinois general assembly lowered the benefits for future employees. Those hired on or after January 1, 2011, started a new pension system that, in general, will require them to work longer in order to begin collecting a pension. In the context of the current workforce, it remains a pretty good deal. It is still a constitutionally protected pension.  Again, this is only for those hired on or after January 1 and in no way touches pensions of those already retired or who were working prior to 2011.  And I have advocated that the state should start using the pension system for Chicago teachers a model for teacher pensions statewide. Yes, the Chicago system needs to be better funded, but itís far better off than the state retirement fund for suburban and downstate teachers.  And thatís because the teachers and the city taxpayers are responsible for its financing. Your pension fund gets very little state money, roughly $10 million this year. Now thatís nothing to scoff at. But compare it to the $2.4 billion the state budget includes to fund the suburban and downstate teacher fund.  More than half of our state pension spending goes to TRS.  The Chicago Teachersí Pension Fund manages to survive on teacher and district contributions. Meanwhile, the suburban and downstate districts pay next to nothing even as Chicagoans pay local taxes to support the Chicago teachersí pensions and pay state sales and income taxes to support the downstate and suburban teacher pension funds.  I think that needs to change.  I believe the suburban and downstate school districts - the employers - can and should pay more rather than rely on their teachers and state taxpayers to shoulder the burden.  In summary, public pensions in Illinois are under siege because the current fiscal climate presents a political opportunity. Frankly, it is politically more palatable to cut pension benefits for public employees and retirees than to raise taxes, cut services or both.  I believe the political opportunists are being shortsighted and ignoring the obvious constitutional conflicts in their zeal to gut public pensions rather than face long-term responsibilities. For decades, you provided tremendous service to our city and our state.  You have earned your retirements with each child that passed through your classroom. It would be unconscionable and unconstitutional for us to renege on the promises you were given when you signed up for duty.

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