Teresa Fiorante relies on her modest pension.
She’s a widowed senior and retired secretarial worker for the Central States Pension Fund living in Cook County. Each month she receives a pension check for about $2,000 from that job, as well as Social Security and what remains of her late husband’s retirement benefits.
But Fiorante’s pension fund is bankrupt. And it’s likely she’ll soon have to make due without it.
“I shouldn’t have to go live with my kids. I’ve done everything right to be independent, but now I can’t be independent,” she said. “My property taxes have doubled, and it’s going to force me out of my home. It’s like they have a gun to your head: Pay this bill or leave the state.”
Fiorante’s struggle stands in stark contrast to the situation of the legislative leaders who have brought Illinois to its knees.
A little-known provision within the General Assembly Retirement System, or GARS, gifts massive pension payouts to those state lawmakers who have been in office the longest – the very men and women responsible for the pension crisis, and who refuse needed reforms.
If he retires tomorrow, Illinois House Speaker Mike Madigan would start drawing a six-figure pension after 1 year. Ditto for Illinois Senate President John Cullerton.
That’s because GARS allows lawmakers who were elected prior to 2003 to hoard pension “spikes.” After serving 20 years in office or turning age 55, whichever comes later, these lawmakers bank a 3 percent boost to their eventual pensions each year.
This is due to a 1989 bill sponsored by former state Sen. Emil Jones Jr. Cullerton, Madigan’s floor leader in the House at the time, was a member of the committee that finalized the bill. It passed both chambers with bipartisan support.
One year after his retirement, Madigan’s pension payment will explode.
The speaker has been in the Illinois House since 1971 and is now 75 years old. That means he’s stacked up 3 percent boosts for 20 years. If he retires tomorrow, his annual pension payment will be spiked by a whopping 60 percent after 1 year, plus another 3 percent cost-of-living increase.
Madigan makes about $95,000 per year from his base salary and leadership bonus. That means his first-year pension will be more than $81,000.
But then the spikes kick in.
After just 1 year of retirement, Madigan’s annual pension will shoot up to more than $130,000. And it will continue to grow by 3 percent each year.
This is unconscionable. Most Illinoisans would say as much.
While the speaker, Cullerton and other longtime lawmakers count their promised retirement money, they refuse to pass any real pension reform. Meanwhile, ballooning pension costs crowd out essential services for vulnerable Illinoisans and put tapped-out taxpayers such as Fiorante on the hook for billions.
Not to mention the costs to government workers themselves: Older workers fear for the security of their retirements, and new workers are often trapped in their jobs because they have to wait to qualify for retirement benefits.
But not all state lawmakers are so morally bankrupt when it comes to pensions.
Nearly 40 House members and 11 state senators have opted out of GARS already, along with Gov. Bruce Rauner and Lt. Gov. Evelyn Sanguinetti. State Sen. Dale Righter, R-Mattoon, filed a bill in April that gives 401(k)-style plans to new government workers, and gives current workers the option to enroll as well.
To be clear: That is the only constitutional way to begin to solve the pension problem. Lawmakers must stop the bleeding. They must stop saddling new workers with failed defined-benefit pension plans immediately.
This isn’t a new idea. The solution has been right under the government’s nose.
For nearly 20 years, state university workers in Illinois have had the option of enrolling in a defined-contribution pension plan. Nearly 20,000 workers have opted into that 401(k)-style plan.
It’s a retirement plan that the worker controls, not Springfield politicians. All lawmakers need to do is take that plan and expand it.
But Madigan and Cullerton don’t like that idea. Instead, they nibble around the edges as the pension problem gets worse and worse. All while remaining in total control.
Here’s a step lawmakers should take immediately: Abolish GARS. It would show leadership has the will to address the state’s biggest fiscal problem. They would face no union opposition.
GARS has only enough money to pay out benefits for 2 more years. Taxpayers actually pay twice for their lawmakers – once for salaries, and again to bail out the lawmakers’ failed pension fund.
It’s time to put that system out to pasture.
Legislative leaders’ refusal to push real pension reform is another unfortunate symptom of their philosophy on so many other state issues:
“It works for us, now pony up.”
It’s up to rank-and-file lawmakers to tell Madigan and Cullerton, enough is enough.
Note to readers: Austin Berg is a writer for the Illinois Policy Institute. He wrote this column for the Illinois News Network, a project of the Institute. Berg can be reached at firstname.lastname@example.org.