Quinn has put together a commission that will look at cutting the state’s contributions to the Illinois teacher pension. This is no longer completely new news, but Illinois has also gone deep into going through with completely cutting contributions to health insurance costs for retired teachers. Reportedly, cutting the health insurance cost would save the state $90 million each year…which in the grand scheme of a state budget is very little. See this earlier post for a few ways to either increase revenue or decrease spending for the state that makes more sense than this cut.
Illinois teachers had the understanding that they were to take lower salaries than what they would be rewarded with in the private sector as well as having to pay a significant amount of their salary into the pension system in exchange for secure income in retirement as well as the state picking up a portion of the bill for their health care after retiring.
Illinois teacher retirement is at risk of becoming significantly less attractive. Teachers understand that medical and insurance costs increase and generally increase at a rate higher than inflation. As a result they expect occasional (even yearly) standard increases to their costs. Teachers were okay with a 5% increase, but they are looking at upwards of a 20% increase now if the state cuts funding for retired Illinois teacher health insurance benefits.
Retired teachers and the individuals and organizations representing them have been more than willing to reach a compromise with state legislators. They have said that retirees would be wiling to pay higher premiums for their insurance but such a large, sudden cut of all state support would not be fair and would significantly strain the budgets of many retired Illinois teachers.
Teachers fully understand the financial situation the state is in as they are right in the middle of the storm. Their pension is woefully underfunded and several powerful voices in our state government as well as some private organizations have called for significant pension reform as the only way to “save Illinois” (clearly, they should take a look at the post I linked to earlier for what would be a much more equitable solution).
Unfortunately, the state of Illinois doesn’t really think the promises they made to their employees for decades no longer count. A more elegant solution needs to be determined and executed for Illinois teacher retirement to survive.