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By: Mark Glennon*

 

Senate President John Cullerton has rekindled his idea that meaningful constitutional pension reform can be accomplished by offering a swap to pensioners — accept lower benefits in exchange for some sweetener. It’s called the “consideration” approach, and most of the press is reporting it as a serious alternative to the approach recently invalidated by the Illinois Supreme Court. Here’s what the City of Chicago, also searching desperately for a means to accomplish meaningful reform, said about it in a sworn court filing earlier this year:

 

Nor would ‘consideration’ work from an economic standpoint. To give participants (or their legal representatives) an incentive to agree, the value of such consideration would need to be similar to the value of the benefits given up. But this would involve trading one obligation for another and by definition would not solve the problem that neither the fund nor the governmental entity has enough money to pay the benefits promised…. And, even if this ‘consideration’ were constitutional, it is unclear how many participants would accept it and, to the extent they did not, full funding would not be available and the funds would not be saved, to the detriment of all participants. (Pages 19-20.)

 

That should be obvious. Nobody will voluntarily accept a swap that’s not for equivalent value. The state would be left in no better position. If pensioners were coerced somehow to accept an unequal swap, it would clearly be unconstitutional under the recent ruling.

 

Illinois Senate President John Cullerton
Illinois Senate President John Cullerton

We’ve been telling you that all along. We’ve also been telling you that John Cullerton has no interest in actual pension reform. He is the go-to guy for public unions in the Illinois Senate. He will continue to propose reform ideas that are no such thing. Evidently, he will continue to be taken seriously.

 

By the way, the entire document from which that excerpt was taken is worth reading for those seriously interested in Chicago’s crisis. It’s blunt and clearly written.

 

*Mark Glennon is founder of WirePoints. Opinions expressed are his own.

 

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