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Chicago Tribune
16-06-2025
- Business
- Chicago Tribune
Editorial: A sexy novel for the beach? How about a radical state pension-funding idea instead?
To anyone looking for light summer reading, here's a tip: Stay away from the Center for Tax and Budget Accountability. The civic do-gooders at CTBA, as it's known, are pushing a complicated solution to Illinois' ongoing pension crisis. Their latest report pairs nicely with the likewise complicated solutions advanced by the Civic Committee of the Commercial Club and Gov. JB Pritzker himself. We pore over this stuff so you don't have to, and here's the familiar story: The state's grossly underfunded public-employee pension systems are getting ever more costly to sustain. Those costs are swamping other priorities, from law enforcement to education to transportation. And any fix worth the name is going to be — that's right! — complicated. It's tempting to let out a groan and move on. After all, our clout-rich governor has failed to get his preferred version of these pension-funding rescue plans through a General Assembly packed with his fellow Democrats. From Pritzker on down, the political will to force the issue is missing, and, so far, CTBA's idea has gone nowhere as well, even though it deserves more serious consideration than it's getting. In a 15-page report and 10-page PowerPoint, the group proposes 'reamortization' of state pensions. Its plan is roughly akin to the state of Illinois taking out a home equity loan and refinancing its mortgage, albeit on a grand scale. The state would issue almost $10 billion in new pension obligation bonds over five years, putting every penny of the proceeds into the pension funds. Illinois would change the timing of its annual payments to the funds from the end of the fiscal year to the beginning, an administrative step that saves taxpayers a surprisingly large amount. Crucially, the deal would replace 1990s-era legislation that shortchanged pensions in its early years while ramping up costs in later years. The bill for that so-called pension ramp is coming due with a vengeance. Left unchecked, it will eat into more and more of each year's budget. CTBA says its plan could smooth out the ramp and achieve 100% funding of the pension systems by 2048 (up from the ramp's 90% goal) at a cost of $23.8 billion less than current law would provide. No tax increase is required. 'This is ambitious, for sure,' Ralph Martire, CTBA's enthusiastic executive director, told us in a recent meeting. 'I don't think anyone needs it as much as we do.' Saving tens of billions sure sounds like a no-brainer. But it's also, yes, complicated, and risky, too. One big risk comes with issuing billions in new bonds. Those are known as 'hard debt' because they must be paid on time, or the state's credit rating gets trashed. The current unfunded pension liabilities are 'soft debt,' which the state has juggled for years to postpone a reckoning even as its credit rating for 'hard debt' has improved under Pritzker's tenure. Pulling off those massive bond issuances would require a leap of faith. Under disgraced former Gov. Rod Blagojevich, the state issued billions in pension bonds but diverted a big chunk of the proceeds to plug immediate budget holes. 'The primary risk is that the money isn't used for pensions,' Martire noted, and temptations are sure to arise with 'emergency' funding demands for, say, transit or schools. During its spring session, instead of seriously considering a comprehensive pension rescue option, the General Assembly focused on digging an even deeper hole for taxpayers. Unions want to add billions in pension costs to upgrade the benefits for public employees hired after 2011. That Tier 2 pension system may indeed need additional funding to bring it up to minimal federal standards. But as far as we can tell, no one in Springfield has done the homework to determine what's absolutely required, vs. part of an unaffordable wish list. As usual, Chicago is leading the state in soaking taxpayers. In the waning days of the spring session, we have already lamented, Illinois lawmakers awarded some Chicago police officers and firefighters more lucrative pensions that will cost tens of millions of dollars in the first year and billions over time. Sweeteners for the statewide Tier 2 pension plans have been tabled for now, but you can bet more backroom deals are coming. We understand it's a lot more fun for politicians to give away taxpayer money than to painstakingly claw the state out of its deep hole. It's also more fun to read a bestselling novel than a dense pension-rescue proposal — or an editorial on the topic, for that matter. So thanks for getting this far. Still, every year it gets harder and harder to ignore these enormous unfunded obligations. Public employees are entitled to the retirement benefits they earned during their service. The simple way to pay for these obligations is to drastically raise taxes. That's unfair, and it would be a disaster for Illinois, chasing away its most productive citizens and businesses and making the state uncompetitive for future generations. The risky and complicated way to deal with the obligations involves plans like those of the Center for Tax and Budget Accountability. This board has also long advocated for a constitutional amendment that would allow the state to address its rigid pension clause. The state needs to think big and pursue a path other than taxing its way out of this ever-more-threatening disaster. Governor, legislators, put away the sunscreen and get serious.
Chicago Tribune
08-05-2025
- Business
- Chicago Tribune
John Cullerton and Jason Barickman: Illinois higher education is poised to win big
Having both served in the state legislature — albeit on opposite sides of the aisle and from different parts of Illinois — we share a belief in the power of education to lift individuals, communities and the state as a whole. We worked together to help pass the evidence-based funding, or EBF, formula that transformed the way in which we fund our school districts, and we have seen how that fundamental reform has reshaped the K-12 landscape. Thanks to additional General Assembly funding, districts have added badly needed positions and programs to support student learning and well-being. Because of EBF, districts have funding predictability, allowing them to plan for the future in ways that are good for students. The new formula and steadfast investment allowed Illinois to withstand the impact of COVID-19 better than the nation as a whole and to rebound with more energy. Today, Illinois is one of the top-performing states in the nation for student academic growth. It is time to bring that same transformational effort to our public universities. Over the past 20 years, the value of a college degree has grown. Yet, during that same period, Illinois has slashed its support for public universities from roughly 15% of its revenue (matching the national average) to a mere 2%. New research from the Center for Tax and Budget Accountability finds that inflation-adjusted spending has fallen 42% since fiscal year 2000, while tuition has more than doubled. This has placed a considerable burden on low- and middle-income families, making it increasingly difficult for students to afford a higher education degree, the report says. A recent survey of Illinois residents revealed that more than half of Democrats, independents and Republicans say the state should increase funding to public universities. When state support withers, tuition rises. That is exactly what has happened in Illinois, which now has the unwelcome distinction of being one of the least affordable places in the country to attend college. We are pricing out the next generation and depriving universities of the resources they need to serve their students well. In doing so, we are depriving Illinois of college graduates, future leaders, and the services, programs and goods that Illinois communities rely on across sectors. If we do not address this structural problem today, we will all pay the price tomorrow. The good news is there is legislation on the table that would not only address this issue, but also do so in a way as powerful and transformational as EBF. Two bills — Senate Bill 13 filed by Sen. Kimberly Lightford and House Bill 1581 by Rep. Carol Ammons — take the best of EBF and adjust and apply core principles to the complex world of four-year colleges. Working with experts, stakeholders and university leaders, they have crafted a first-ever formula for Illinois' public universities. Better still, the proposed formula considers the resources institutions need to fulfill their mission, run effective programs, and meet the needs of students from different regions, economic and academic backgrounds, while also taking into account the resources each university can bring to bear. For the first time, the formula allows the state to understand how well funded each university is compared with their unique needs. None of our institutions is fully funded. Some universities have 40% of what research tells us is needed to effectively serve students; others have 88%. Both bills call on the state to invest at least $135 million in new funds each year for the next 10 to 15 years to bring the system as a whole closer to full funding. Like EBF, the legislation ensures that new funding follows need: The adequate and equitable funding formula ensures that institutions furthest from adequacy receive a greater share of new dollars to help catch them up. Transparency and accountability measures will track the connection between new funding, affordability and student outcome. The proposed new university funding formula is based on a simple, powerful principle: Let's understand what each university needs to fulfill its unique mission and serve its unique student population, then let's make sure we have a plan to get resources where they are needed. This has been a winning strategy in K-12, and we hope the General Assembly and governor will embrace this effort with the same bipartisan support and sense of purpose they brought to passing (and then funding) EBF. In an increasingly partisan world, Illinois continues to demonstrate that we can come together to solve problems to build a strong future.
