Any spending changes must include reforms
Illinois must adopt reforms in its three biggest cost centers. All the money in the world won't fix the situations with our state's health care, education and pension programs without meaningful reforms.
So much talk at the Statehouse revolves around ways to get more money for state government; fewer voices are heard suggesting we live within our means and prioritize spending on our most critical needs. As legislators approach session's end, they may compromise on numbers, but it's critical they don't compromise on reforms that could get us out of the hole we're in and prevent us from getting into another one.
Critical issue #1, Pensions: The state is carrying $43 billion in unfunded public employee pension liability. The liability continues to grow each year. The General Assembly is not meeting annual funding targets established under a 50-year plan undertaken in 1995 to restore fiscal integrity for the pension funds. It is obvious the debt cannot be reversed without a significant influx of new money dedicated toward meeting the outstanding obligation. If the General Assembly raises revenues, pensions should get first claim. Any tax increase should be accompanied by reforms.
One possible reform would be to restructure the public employee benefits plans to more closely reflect benefits in the private sector. Illinois public employee benefits are more generous than those in the private sector where significant restructuring occurred over the past decade. Because public employee pension benefits are specifically protected in the State Constitution, it is generally accepted that any restructuring must apply only to newly hired employees. This would not resolve the backlogged obligation, but it would slow the rise in taxpayer obligation for future pension payments.
Other private-sector style reforms could include implementing defined contributions in place of defined benefits, increasing employee contributions by 1 percent, tightening early retirement rules, and halting the guaranteed 3 percent annual benefit increase. The state should also revisit the lifetime free health-care benefit for retirees.
Critical issue #2, Education Funding: Anyone who talks about more money for education without acknowledging or addressing the need to improve the quality of education is either blind to the realities of the new global marketplace or is choosing to ignore the dire consequences of maintaining the status quo in Illinois public education. Money is important, but successful outcomes are more important.
Possible solutions could include adding performance-based measures to improve student, teacher and school results, and subtracting rules that hamper improvements. Adding core curriculum and graduation requirements aligned with college entrance requirements, performance-based pay for teachers, mandatory after-school tutoring, and a “P-20” Council to align all education systems would dramatically raise the bar. Eliminating elements like the charter school cap and teachers' right to strike would keep the focus on educational outcomes rather than actions that restrain educational progress. Streamlined assessment processes to easily and consistently measure performance and opportunities for improvement, and stronger financial controls to ensure funds are spent appropriately and effectively will make the most of revenues directed toward education.
Critical issue #3, Health care: The governor's objective is to provide publicly-funded health care to 500,000 uninsured Illinoisans. While the Illinois Chamber acknowledges health-care coverage issues are significant, the solution is not to simply throw billions of dollars at the problem. Coming to a resolution on health care requires far more attention, consideration and detail than has been offered by the administration. In particular, the Chamber expects a state program that embraces cost controls, managed efficiencies, quality care measures, pricing transparency, self-directed health-care incentives, use of information technology to improve reporting, standards and outcomes, and other management tasks that will assure taxpayers their dollars are well spent.
The Illinois Chamber thinks the Governor's expansion proposal will upset the marketplace for the 85 percent of the population who already have health-care benefits. The Chamber will support efforts to find solutions for the 15 percent who are uninsured. There are solutions that can reduce the number of uninsured without taxpayer-subsidized, government-run universal health care for millions, which is apparently the governor's vision for Illinois. One obvious choice is to let the insurance providers offer lower cost policies that offer more options for buyers.
Before legislators and the Blagojevich administration forces Illinois taxpayers to accept tax increases for their big spending agendas, it is imperative for the state to not ignore pro-business, pro-taxpayer reforms that need to be incorporated to improve public policy. Despite their best intentions to improve government service by throwing big bucks down the wishing well, government officials must be reminded that management, efficiencies and outcomes are just as important as more money.
Doug Whitley is president and CEO of the Illinois Chamber of Commerce. He can be reached at 312-983-7100 or firstname.lastname@example.org.