Illinois' history of attempted pension reform is a cautionary tale. It's not enough to make changes without doing the math to understand their impact.
the ill-fated attempt to reform Illinois pensions by requiring local school districts to pay the added costs of their teachers' pensions when they boost their salaries beyond 3% per year; this measure was slipped into last year's last-minute budget and removed in this year's last-minute budget, in a demonstration of the intractability of Illinois' pension woes so long as the guarantee of future accruals and future increases remains in the state constitution.
But these calculations did not occur in advance of Illinois' implementation of its two prior reform attempts, the Tier 2 and Tier 3 plan changes to the benefit provisions for new hires. Each of these was rushed through the state legislature without any consideration of its impacts, and offered short-term gains but at the risk of posing a"pension time bomb" that may turn out to have been no real solution at all.
The Tier 2 system dates further back; it covers all employees hired after 2010.
In 2018, the cap stood at $113,645, the average teacher's wage was $71,845 and the average wage for teachers at retirement age was $89, 994. And by 2050, the cap will have grown so slowly relative to teachers' pay that it will only cover 67% of the average teacher's salary, and 53% of the average for near-retirees.
But Andrew Bodewes, TRS' legislative director, told the panel that because of the small cost-of-living increases built into Tier 2, those pensions soon are likely to fail to meet the federal adequacy test.
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