Because of a cap written in state law, the amount we were paying into the system was not remotely close to keeping pace with our obligations. It was like paying the minimum on our credit card with more and more interest and costs piling up over time. Our unfunded liabilities were growing by $1 million — per day.
We came up with a simple but temporary solution: pay more each year through an intergovernmental agreement with our pension fund. Now, it’s time to change the pension code to make our fix permanent.
We took definitive steps to address fund liabilities in a responsible and sustainable manner by paying an extra $300 million each year. This successfully increased pension funding levels by $2.3 billion. Through this, the pension system is now estimated to have enough funding to cover 70.7% of its future liabilities, up from 60% before we started these additional payments.
This is a dramatic improvement. We’ve made this progress and kept our pension promise through a pandemic, economic downturns and other challenges. This work has been recognized by ratings agencies and good-government groups, but we want to do even more. We want to continue leading the way when it comes to addressing pension funding. Making a small change in Springfield to current law ensures we will keep doing it year after year.
But while we were working on our pension reforms, we saw an opportunity to get in front of another issue before it became a bigger one. Under the current statute, increases in the pensionable salary cap for members hired on or after Jan. 1, 2011 (Tier 2) have not kept pace with increases in the Social Security wage base.
My office’s proposed reform is to ensure that the county is consistent with federal Safe Harbor guidance — where pension benefits provided to an employee instead of Social Security must be comparable to the value of Social Security benefits. We want to make sure employees are not receiving less than what they would get under Social Security.
This is about fairness and following the law, but it’s also about encouraging public service and making sure we keep good people. It’s something our legislation’s sponsor, State Sen. Rob Martwick, has been saying: Would you want to come to work for the county if you knew that after putting in 30 or 40 years your retirement would not be close to what you would get at another job?
The total pension payments, including the supplemental, can fluctuate but has generally been around $500 million a year. The Tier 2 costs, which will be a part of these payments, represents a minimal portion — less than 1%.
This is an amount we are comfortable with and would not strain the county’s ability to provide essential services. We believe this is a fiscally responsible, good-government, good public policy initiative that helps retain employees, avoids expensive lawsuits and addresses the problem before it becomes costlier down the line.
This all speaks to a stronger, more stable Cook County.
It’s an example of setting a goal and a plan and remaining committed to it. Now we are asking the General Assembly to help us build on our success by passing pension reform legislation that makes these payments permanent while also fixing another problem before it gets bigger.
Toni Preckwinkle is Cook County Board president.
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May 17, 2023 at 09:55AM