Pritzker introduces pension reform plan that could save taxpayers billions. Will it work?

If Gov. JB Pritzker has his way, a 30-year pension funding initiative of a Republican predecessor would be no more.

Then-Gov. Jim Edgar signed a bipartisan pension reform package in 1994, setting a pathway for the state to fund 90% of its pension liabilities by 2045. Over the years, lawmakers on both sides of the aisle have slammed the slow pathway to meeting that goal — currently funding less than 45% and $141.3 billion short overall.

The Pritzker team discussed how to reform the plan, commonly known as the "Edgar Ramp," prior to the governor's delivery of the budget proposal.

The new plan, needing approval of lawmakers, would fully fund pensions by 2048 and increase annual contributions from the state once the debt is cleared.

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Asked his thoughts on Pritzker's proposal, Edgar told The State Journal-Register the new plan is not a major difference from the one led during his first term as governor.

"How you get out of this pension problem takes time," he said in a recent interview. "And you got to be disciplined and not increase benefits."

Shifting the goal to fully-fund pensions by 2048 would follow suit with states like Wisconsin and South Dakota that already have met those marks.

Taxpayers could be saved billions of dollars

Spending under the current plan is estimated to top $18 billion by fiscal year 2045 before dropping substantially the following year. Pritzker's plan would never see annual pension surpass that sum, but instead see higher contributions in 2033 through 2040. Lower contributions would follow until 2045 before a hike through 2048.

Reaching that benchmark will be helped, the governor's office said, when two long-term debts are paid off in coming years. The state's $6 billion loan to cover backlog borrowings and $10 billion in pension funding bonds will be cleared in 2030 and 2033 respectively.

Pritzker suggests taking half of the revenue that's been used to pay off those bonds to make additional payments to the state's five pension systems when the debts are paid off. It is estimated this move would save taxpayers $5.1 billion by FY45.

Even if lawmakers approved the governor's proposal, it would not impact any pension spending in the upcoming fiscal year. Pritzker's proposal calls for the state to dedicate $10.1 billion in pension spending, nearly 19% of the proposed $52.7 billion budget and a $300 million increase from the estimated current fiscal year tally.

It follows on other decisions by the governor to invest an additional $700 million above certified amounts into the systems in FY22 and 23. Pritzker also signed legislation in 2022 extending the pension buyout program for state pension recipients through 2026. Collectively, those investments are said to save taxpayers $4.4 billion according to the governor's office.

The Illinois Supreme Court recently upheld a state law permitting the consolidation of downstate police and fire pensions, another initiative Pritzker signed into law.

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'The right thing to do'

The governor's proposal has the backing of Comptroller Susana Mendoza and the House Personnel and Pensions Committee Chair, state Rep. Stephanie Kifowit, D-Oswego.

Kifowit said she's introduced similar legislation to the governor's and wants to move the standard to being 100% funded as "fiscally responsible."

"Over the last year, we've been advocating, we gotta go to 100%," Kifowit said. "I think it's the right thing to do. And if it takes a little bit more time to do it, I don't see a problem with that."

Pension reform was part of a slate of legislation Pritzker wants the General Assembly to pursue, including a healthcare reform package.

Legislation would need to be crafted and passed by the General Assembly for the governor's proposals to become a reality. Lawmakers will return to Springfield on March 5.

Contact Patrick M. Keck: 312-549-9340, pkeck@gannett.com, twitter.com/@pkeckreporter.

This article originally appeared on State Journal-Register: Pritzker calls on legislature to pursue pension reform