Tuesday, December 31, 2013

Has “shall” ever been such an issue? Pension reform wends way into courts

The lawsuits that were long expected against Illinois state government are now arriving.

Pension funding "reform" is going to wind up here, regardless of what route it travels in coming years
For the Illinois Retired Teachers Association managed to get their arguments against the pension funding reform measure the General Assembly managed to approve this year – and the teachers couldn’t even wait until the new year.

THEIR LAWSUIT IN Cook County Circuit Court got slipped into the legal process before Janet Davies could do her annual “sayonara” to 2013. Of course, there will be other groups representing various political interests who also will file lawsuits to make sure they’re represented in this political fight.

All of the groups that hate what the state Legislature did concerning pensions are going to want to claim it is their lawsuit that took down the law that is desperately needed.

All the people who are desperate to believe that the state is trying to resolve its financial problems at the expense of its retired employees aren’t going to care if their success in court winds up tossing Illinois government into an even bigger financial jam!

And all of those who just want to cause mischief for state government? They will be the big winners.

THIS IS ALL caused because of the fact that for many years going back to the 1940s, state government short-changed the amount of money it should have been putting into funds to cover the costs of providing pensions in the future to its retired employees.

Short-changing an expense works if you only do it briefly, then immediately come back and put a surplus of cash into the accounts to make up for the brief loss.

But as many people find out when they try doing the same thing to pay their own bills, the short-changed expense often does not get replenished in a timely manner. As time passes, it becomes more and more difficult to cover the cost.

In the case of state government, the debt had grown so large that it was eating up state funds that government officials would prefer to spend on other areas – such as education, health care, public safety or other programs.

THE COST-OF-living adjustments meant to account for inflation were causing the debt to grow so large. Something had to be done; something desperate and drastic.

Such as the limits on the adjustments in future years. The increases written into law won’t be as big. EXCEPT, …

The lawsuits are all going to find various ways of claiming that such a cut violates the clause in the state constitution that says public pensions are a “contractual relationship” whose benefits “shall not be diminished or impaired.”

They are taking such a literal, hard-lined interpretation that I suspect the masses of Illinois will become incredibly disgusted if they actually prevail in court.

THIS MAY BE one of those times when the fact that the courts have their own moments of being politicized may wind up giving us a benefit.

This year's issues will carry over into future
Because the perception by some political observers is that Illinois House Speaker Michael Madigan’s influence over the courts is such that there isn’t a judge alive who would be willing to have his (or her) name on a court order that struck down the pension funding reform measure.

I’m not about to guess how this issue will eventually be resolved – other than to say that if “pension reform” does wind up getting struck down, any future attempt at reform by the Legislature will likely be even more punitive.

And we may someday see the organized labor interests that are desperately fighting against this version of pension reform wishing they had accepted it while they had the chance!


No comments: