PROillinois: New Pension Plan Idea Debuts

MADIGAN PENSION BRIDGE NOT FAR ENOUGH

PROillinois New Grassroots Campaign to Unshackle Local Governments From Unfunded State Pension Mandates

(March 30 – Northbrook, IL) Runaway government employee pension costs is the hot topic, with average taxpayers and the press starting to take notice of this looming public finance disaster. A more dramatic, yet simple pension reform effort known as “the PROillinois plan” is gaining momentum, and is being promoted by a grassroots group of Illinois residents and local government leaders who want to put an end, once and for all, to the unworkable Springfield practice of dictating to local governments the retirement benefits paid to local government employees.

The Illinois General Assembly finally jumped into action last Wednesday by passing a blitzkrieg pension reform plan, with House Speaker Madigan miraculously introducing a bill in the morning and having his bill passed in the State House and Senate by the end of the work day. This will undoubtedly be promoted as “Springfield tackles pension reform,” but the Madigan plan is a bridge that doesn’t go far enough. The PROillinois group is challenging Speaker Madigan and the rest of the State Legislature to not rest on their laurels for the pension reform achieved on March 24. The problem with the Madigan plan is that it continues to hand unfunded pension mandates to local governments, and the Madigan plan doesn’t even touch the most expensive and problematic pensions that are swamping local governments – public safety pension plans.

“We’re glad Springfield is now paying attention to the public employee pension problem that Springfield created, and the Madigan plan is certainly a step in the right direction, but it is only one step,” said Mike Basil a Trustee for the Village of Wilmette and a leader of the PROillinois initiative. “There are miles to go before the average Illinois taxpayer can sleep soundly, and know that retirement benefits for government employees are fairly and reasonably managed. Unfortunately, the Madigan plan continues to leave Springfield in the improper position of dictating the benefits that local governments provide to local government employees, without having Springfield pay the costs of those benefits. If local government has to pay for the costs of a retirement benefit for local government employees, it would seem obvious that local government should be empowered to choose the retirement benefit being offered to its own employees.”

The PROillinois initiative is a single-issue pension reform effort to end unfunded pension mandates from Springfield, where the state legislature dictates the level and type of pension benefits that municipalities, park districts, library districts and other local governments provide to their employees, while making the local units of government pay for the costs of those benefits. Under the PROillinois proposal, local governments would be granted authority by the state to choose the retirement benefit offered to newly-hired government employees, including the right to offer them defined contribution (401(k)-style) retirement plans, the most common retirement benefit now used in the private sector.

“The state legislature has granted increasingly generous benefits to your local government workers,” said Kati Spaniak, Northbrook Village Trustee. “And thanks to the state legislature’s frequent unfunded mandates to enhance local government employee pension benefits, your local government has to figure out how to pay for them. That means higher property or higher local sales taxes. Or for some towns, it means excessive borrowing, or delaying street repairs or sewer replacement. This situation has to stop.”

“Over the last 13 years, the pension costs for our local public safety employees – costs that are dictated by Springfield – have had annual average increases of more than 15 percent,” said Basil. “That’s a 15 percent increase every year for 13 years. This is fiscally unsustainable growth of a cost item that should rise at the rate of inflation. The power to increase retirement benefits must be accompanied by the responsibility of paying for the increases.”

As its web site explains (www.PROillinois.com), the group is non-partisan and it takes no contributions, relying instead on a coalition of local government officials, organizations and ordinary citizens volunteering their time and energies to solve one of the biggest financial problems facing Illinois. It is being spearheaded by Northbrook Trustees Kati Spaniak and Kathryn Ciesla and Wilmette Trustee Mike Basil.

“The advantages of allowing local governments to enroll new hires into 401(k)-style retirement benefit plans are significant,” explained Ciesla. “Your local government would enjoy more manageable and predictable costs. Taxpayers would enjoy more stable property taxes because the retirement benefit costs would be more predictable. And newly hired employees would have retirement plans that are portable, allowing employees greatly improved career opportunities.” At the same time, it would allow municipalities to attract the best possible candidates to fill vacant positions.

The PROillinois reform is focused on a simple, fair, employee-friendly solution to a daunting public policy issue. “Springfield should keep working on the issue, and adopt the PROillinois plan, which properly matches political power and fiscal responsibility – the political power of determining benefits must be matched with the fiscal responsibility of paying for the benefits granted,” said Basil. “No other arrangement of power and responsibility is viable. The past mismanagement of ever-increasing pension benefits by Springfield proves this point conclusively. Right now, Springfield spends and local property taxes pay the bill.”

About PROillinois – Amendment HB 5576

The PROillinois pension reform plan is currently under consideration in the House Rules Committee as an amendment presented by Beth Coulson, (R) 10th District, to House Bill 5576.

Michael Basil, Village of Wilmette Trustee

Kati Spaniak, Village of Northbrook Trustee

Kathryn Ciesla, Village of Northbrook Trustee


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