A “Pension Crisis” Mentality Won’t Help: Thinking Differently About Illinois’ Retirement Systems
reportposted on 06.08.2021, 18:08 by Robert Bruno, Amanda Kass, David MerrimanDavid Merriman
Few will argue that Illinois has significant issues with the underfunding of its five public employee pension systems. In fact, many say the state faces a continuing “pension crisis.”
However, this report argues that this “crisis” framework or mentality surrounding the issue actually impedes a sustainable solution. The report urges policymakers to rethink the conversation about pensions and Illinois’ finances.
“Illinois lawmakers have long sought a silver bullet solution that will not increase (or even lower) the state’s required contributions while simultaneously shoring up pension systems’ finances,” write researchers Robert Bruno, Amanda Kass and David Merriman. “We view such a policy as unattainable and its pursuit a distraction from the job of responsible policymaking.”
This paper makes three arguments: 1) that to resolve the pension underfunding issue the focus should be on long-term trends and peer comparison; 2) that a “pension crisis” is a situation in which the pension system is insolvent and unable to pay benefits – which is not the current case in Illinois; and 3) rather than a singular problem, there are two interrelated and in-conflict issues – the concern over pension finances and state operating budgets where expenses regularly exceed revenue. The full paper is available at (LINK).
Bruno, Kass and Merriman suggest that referring to the issue as a “crisis” leads to focusing only on short-term metrics and solutions. They urge state lawmakers to abandon the crisis rhetoric and to also abandon the practice of reducing that state’s pension contributions in order to balance the state budget.
“Our goal with this paper is to change the conversation about pensions and the state’s finances,” the report says. “We believe this is important for addressing the challenges facing the state in a calm, thoughtful and deliberate manner.”