Editor’s Note: This is the second installment in a series of pension articles.

The Illinois legislature’s strategies to improve the $85 billion unfunded pension liability focus on short-run quick fixes instead of a long-term cohesive plan, the director of accountancy said. 

President Bill Perry and Hank Davis, the director of accountancy and a professor in the Lumpkin College of Business and Applied Sciences, will address discussions developing among Springfield legislators and pension reform at 2 p.m. today at the Phipps Lecture Hall in the Physical Science Building. 

“I have not seen any substantive policies from the legislature to address this pension issue,” Davis said. “An

example of this short-run thinking is the notion of shifting the cost of teacher retirement from the state to local municipalities.” 

Changing the source of the funding does not change the cost so it becomes a matter of who is going to pay for it, Davis said. 

Perry said if universities had to pay part of the employer contribution, it would involve reallocating university resources in some form. He said he would not be inclined to raise tuition to cover the costs for two reasons.

“I don’t think it would be the right thing to do and second, raising tuition wouldn’t cover the costs anyway,” Perry said. “The way tuition is structured, you pay the same tuition for four years and when the new students come in, their tuition is a little higher, but it doesn’t generate much money.” 

The event is the first pension forum sponsored by the Council on University Planning and Budget to facilitate conversation on how pension reform will affect the university, Perry said.

“Depending on the reform, it could have a negative impact on recruiting and retaining faculty by being non-competitive with retirement benefits compared to other states, and that affects instruction in the university,” Perry said. “That could also affect students if they lose their mentors, and we could lose expert faculty leadership.” 

Perry said several reports regarding different approaches to pension reform are circulating throughout the state, and one report could help promote discussion within the university and the community.

The report titled “Fiscal Sustainability and Retirement Security: A Reform Proposal for the Illinois State Universities Retirement System” was written by University of Illinois at Urbana-Champaign’s Jeffrey Brown, the director of the Center for Business and Public Policy, and Robert Rich, director of the Institute of Government and Public Affairs.

Davis said the report is the first document he has seen that addresses a long-term, viable approach to pension reform.

The State Universities Retirement System is one of the five Illinois pension systems. 

The other four are the Teachers’ Retirement System, which is the largest, the Judges’ Retirement System, the State Employees Retirement System and the General Assembly Retirement System.

The report revolves around three overarching goals of reforming SURS: to attract talented faculty and staff by providing adequate benefits from a reliable funding source; to be financially sustainable by having the state reduce unfunded pension liabilities through a credible commitment; and to respect state constitutional protections by honoring the retirement benefits of current retirees. 

William Weber, the vice president for business affairs, said however the pension reform advances, he hopes that it would satisfy certain parameters.

“First, I hope that whatever happens would be phased in over a reasonable number of years to give us time to plan and adapt,” Weber said. “Second, I would hope that the state’s current obligations for the unfunded pension liability that has built up for years is not shifted to the universities and that the state is the one that is responsible for it.” 

Perry said they plan to have a second forum in late-March, and he will use the first-hand concerns brought up at the forums to continue conversations with state legislators. 

Rachel Rodgers can be reached at 581-2812 or  [email protected].