Editorial: Public pension reform still key to Illinois' recovery
Peoria Star Journal Editorial Board | July 22, 2017 at 7:00 p.m.
A few eyebrows were raised regarding Mike McCoy’s hiring as police chief in Washington following a long stint as Peoria County’s sheriff. Not least among the reasons was a very generous compensation package for a town and police department of Washington’s size.
In short, a starting salary of $120,000 — topped in this part of central Illinois only by Peoria’s police chief and the job McCoy just left — is a lot in any Mayberry.
Much as the process could have been better in Washington — McCoy sat on the search committee before pursuing the job himself and no one else from a pool of 55 was reportedly interviewed — McCoy is obviously qualified for the position, and his hiring in and of itself is not the subject or purpose of this editorial.
What is? His $120,000 is only half the story. Literally, about half.
That’s because between his salary, the Illinois Municipal Retirement Fund pension he earned through Peoria County — now topping $102,000 with a 3 percent annual cost-of-living raise — and Social Security, the 68-year-old McCoy stands to make in the vicinity of a cool quarter million annually over the four years of this contract. In fairness, McCoy emphasizes that he is not participating in Washington’s pension and health insurance programs, benefits enjoyed by his predecessors that, in terms of total compensation, make it pretty much a wash for Washington taxpayers.
McCoy acknowledges being "cognizant of what people think" and says his decision to pass on those offered benefits was in part a response to it. "I don’t want to be known as one of those guys who has five pensions ... I’ve been careful ... tried to do things above-board."
We don’t blame people for wanting security for themselves and their families in retirement. From paycheck after paycheck over decades, they devoted a percentage to their pensions even if the governments that employed them did not always respond in kind (though IMRF is healthy relative to other Illinois pension systems). They abided by the rules in place, played their options well. Arguably few among us wouldn’t do the same were it available.
McCoy is hardly alone or even at the top of the heap. Local Circuit Judge Kevin Lyons, for example, pulls down more than $362,000 annually between his $198,000-plus salary and the $164,000-plus pension from his previous job as Peoria County’s longtime state’s attorney, while now working on another pension for state judges (if one with diminished benefits following legislative reform).
Meanwhile, some 7,500 retired Illinois educators alone drew pensions of six figures or more in 2016, with that number growing rapidly (OpenTheBooks.com). While most of the nearly half million state government pensioners get considerably less, the Illinois Policy Institute still puts Illinois’ pension debt at $27,000 per household, at least.
We do fault the legislators who unthinkingly made these sometimes eye-popping benefits possible, piling one pension sweetener on top of another over many decades with little regard for taxpayers. Most of the latter work in the private sector, many on effectively flat wages, and can only dream of a retirement that rich, if they’re fortunate to have a pension at all.
It might be a different story if those legislators hadn’t consistently shorted their commitments to those pension plans, producing the largest unfunded pension liability in America and the budget crisis and bond rating to match. We might be a little less sensitive to it if Illinois hadn’t just raised its income tax to address these debts. We might be a little less alarmed if Peoria City Manager Patrick Urich didn’t liken the city’s soaring pension obligations, specifically to police and fire, to the video game "Pac-Man" in the way they’re gobbling up city revenues and crowding out spending on other services.
"It’s true that Illinois pensions are delicate dramas for taxpayers. I collect one and I am one," notes Lyons. "Considering my available choices were to either accept or decline pension pay, I chose to deposit what the state has provided. So far the checks have not bounced ... As for my judge’s salary, the state would be paying someone no matter if it was me or someone else ..."
Ultimately, we know this: Public pensions are what’s driving Illinois’ decline. While steps have been taken to bring public and private sectors more in line — Illinois’ tiered system for new hires; House Bill 418, which aims to prevent so-called "double-dipping" among retired police officers who return to active duty and start on another public pension, etc. — an imbalance remains that simply is not sustainable. Corralling future retirement costs is critical to Illinois’ recovery, if there is to be one.