Can a Constitutional Convention Save the Pension System?
One of the chief arguments against a constitutional convention is that “they” will take away the pensions. In fact, there are some proponents (chiefly business groups) that advocate scrapping the pension system because it is a large part of the state’s debt. To be fair, in about 10 years, the state’s pension obligations threaten the solvency of the state without reducing pensions, raising taxes or both. It is a problem that needs to be solved, and solved soon.
The pension problem is chiefly a creation of the current Illinois constitution. The constitution regards pensions as an “enforceable contractual relationship” which cannot be diminished. Come hard times the pension checks must still go out. However, the constitution does not require the funding of the pension system. This was a very intentional choice by the convention delegates in 1970 who wrote the text.
It made sense to the delegates to give the General Assembly discretion in how they funded the pension system. The General Assembly has used this discretion to shortchange the pensions every single year since ratification. Some years they even took money out. This discretion has been grossly abused and shows the General Assembly as a poor steward of the pension system. The chief problem facing the pensions is not “generosity”, it is a chronic and perpetual failure of the state to contribute the amount they promise.
There are those that argue the solution to this problem is to simply let the state out of its promise to workers. The problem is that such a solution would be ruled unconstitutional under the federal constitution. Article I, Section 10 of the U.S. Constitution lists several things states cannot do. States cannot enter into treaties, coin money or impair the obligation of contracts. By calling pensions an “enforceable contract”, the U.S. Constitution forbids them of taking them out from under people, even via constitutional amendment.
Those who are vested in the pension system could not have their pensions confiscated, period. Federal case law is clear on this point in cases such as McGrath v Rhode Island Retirement Board. Anyone who says the pensions will be taken is using fear-mongering in an attempt to scare citizens from demanding the reforms they are entitled to.
On the other hand, adopting a “wait and see” approach will only result in an exponentially growing pension debt that eventually leads the state into bankruptcy. There is an exception to the federal contract clause, namely if the diminishment of a contract serves an important public purpose. While it is impossible to know for sure, avoiding bankruptcy of a major state certainly is an important public purpose to which a court may decide a benefits reduction is necessary.
In short, there is no risk to the pensions by trying to address them in a convention, however, waiting for bankruptcy does entail significant risk to those in the pension system and potentially even those already retired.
So what could be done to fix the pension problem in a convention? The only proposal in the state (that isn’t a promise to fix the problem) is one that I created. Namely, the General Assembly has proven they cannot be trusted to fund the pensions and keep their promises. Instead, the constitution should be amended to require the employing agency to pay the pension contributions directly out of their own budget.
The benefits of this are several. One, a state agency can be sued to force them to pay the promised pension contributions, the General Assembly cannot be so sued. Two, employing agencies pay the full cost of abusive pension games to benefit top administrators. Three, employing agencies will bear full cost for employment of people and will make more efficient hiring decisions. This will not fix the debt already incurred, but it stops the massive bleeding from a General Assembly failing year after year to keep their promises.
If you want to save your pension in November, vote yes for a constitutional convention. If you want to roll your dice and gamble with your retirement, vote no. Either way, we deserve a state that keeps its promises.
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