Public Employee Pension Reform Advances in Illinois

Today’s Wall Street Journal editorial highlights the baby steps Illinois is taking toward enacting public employee pension reform, noting that this could be the “start of a nationwide backlash against the scandal of runaway public pensions.”

State government employees in Illinois receive generous defined-benefit pension plans with compounded annual cost of living increases. As of August 2009, 536 Illinois public employee retirees earned a pension of more than $100,000. Former state employee (and now U.S. Senator) Roland Burris received a pension payment of $121,747 in 2009. You can look up the individual pension payments for state retirees at

In response to the public’s frustration with the state’s habitual fiscal mismanagement, the Illinois General Assembly passed a pension reform bill that keeps the defined-benefit structure but institutes a benefit cap, requires an older retirement age, and prohibits double dipping. Governor Pat Quinn has yet to sign the bill, but he called for similar reforms in his March budget blueprint.

As I pointed out in the Wall Street Journal editorial, what the legislature passed were the bare minimum reforms. They only apply to newly hired employees, not existing employees.

Considering that Illinois has an $83 billion unfunded pension liability for benefits already earned by current employees, prospective benefit reforms will need to be buttressed by a pension funding mechanism that also tackles runaway government spending.

The public employee unions in Illinois are squealing over the changes, but the reforms—however minor—are long overdue.