Candidate Governor Jeanne Ives Leads the Charge on Transformational Pension Reform

 For Immediate Release 

Ives Leads the Charge on Transformational Pension Reform

“After his election, Benedict Rauner was quick to abandon us in the fight for pension reform. His betrayal has not gone unnoticed by the ratings agencies. And once the junk ratings come, it will be too late to reverse course.” 

WATCH: VIDEO OF IVES’ STATEMENT HERE

December 19, 2017 – Last week, a Fitch Ratings report determined that Illinois is the worst in the nation when it comes to pensions as a share of residents’ personal income. Under Fitch’s calculation, Illinois’ total debt – defined as net tax-supported debt and net pension liability – amounted to more than 28 percent of Illinois residents’ personal income. The average in other states is 3 percent. State Representative Jeanne Ives, a Republican Candidate for Governor, released the following statement:

“The Fitch Ratings report that Illinois’ unfunded pension liabilities equaled 22.8% of residents’ personal income last year, compared to a median of 3.1% across all states and 1% in Florida, explains why Illinois’ economy has been stagnant, growing a meager 0.9% on an inflation-adjusted annual basis since 2012—the slowest in the Great Lakes and half as fast as the U.S. overall.

“Illinois finances and fiscal policy aren’t just bad, they are extreme and immoral. Illinois families and businesses contribute billions of dollars each year to both local and state pensions, yet the state’s unfunded liability continues to rise, despite increasing contributions and a favorable stock market.  Currently, pension payments eat up a full quarter of our state budget.

“After his election, Benedict Rauner was quick to abandon us in the fight for pension reform. While some in Springfield chose to ignore his betrayal, it did not go unnoticed by the ratings agencies. And once the junk ratings come, it will be too late to reverse course without an enormous amount of pain to taxpayers, state retirees, and the state’s most vulnerable citizens.

“I urge Governor Rauner to join me, and many of my colleagues in the General Assembly, in taking thoughtful and transformative action on the state’s most pressing issue. One of the first pieces of legislation that I filed as a state legislator was a bill to bring about major reforms to our pension system (HB 3303, 2013, 98th ILGA). Our pension system is the state’s most urgent budget issue. It must be solved to save our state and our cities.

“These three initiatives must happen simultaneously:

  • Pass a constitutional amendment to change the pension protection clause in Article VIII, Section 5 of the Constitution of the State of Illinois, which states that pensions cannot be diminished or impaired.  This change will ensure taxpayers are not on the hook for pension obligations on services not yet rendered.

  • Require all new hires to enter a 401K-stlye self-managed plan. This provides the flexibility and ownership of assets that is prevalent in our private sector and relevant for our modernized employment system where job mobility is important to workers. As well, the US Military is shifting to this plan for all military personnel.

  • Re-negotiate pension obligations with current workers and retirees. Many of these plans will either be insolvent or require confiscatory taxes that cannot be paid. We must have an honest conversation, as Rhode Island politicians had with their pensioners, in order to solve this problem once and for all.

“The plan I am proposing ultimately restores fiscal order to the state by eliminating unsustainable pensions and unfunded liabilities. This paves the way for the economy to flourish, fostering an environment where businesses can thrive and create the jobs Illinoisans need.”

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For more information or to book Jeanne Ives, contact Kathleen Murphy at 630-329-4680 orkathleenemurphy26@gmail.com.

Illinois Pension Crisis Fact Sheet  

  • Illinois pension numbers were calculated under conservative assumptions. Fitch puts Illinois’ pension shortfalls at $151 billion, rather than the official $130 billion the state reports. Moody’s Investors Service, by comparison, calculates Illinois’ pension debt to be $251 billion under even more realistic investment assumptions.
  •  Fitch Ratings reported this week that Illinois’ unfunded pension liabilities equaled 22.8% of residents’ personal income last year, compared to a median of 3.1% across all states and 1% in Florida.
  • The report helps explain why Illinois’s economy has been stagnant, growing a meager 0.9% on an inflation-adjusted annual basis since 2012—the slowest in the Great Lakes and half as fast as the U.S. overall.
  • The state’s massive debt is one of reasons why Fitch has Illinois rated at BBB, two notches above junk, while Moody’s and S&P both rate Illinois even lower, just one notch away from junk.
  • Wirepoints.com analysis reports, “Since the end of the Great Recession, the S&P 500 index has recovered and grown by more than 200 percent, including reinvested dividends, to reach record highs.  At the same time, Illinois’ pension shortfall worsened by 65 percent, to reach $129.1 billion. In 2009, it was $78 billion.”
  • This year, the pension systems cost Illinois taxpayers over $6.5 billion. But that amount shorted the system by $1.4 billion. It relied on pension reform that won’t be in place until 2019, and lower than actuarially required contributions.

Date: 12.19.17

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