State Sen. Michael Noland

By Ted Schnell • BocaJump | Jan. 19, 2012

State Sen. Michael Noland expressed hopes that he and the other members of Gov. Pat Quinn’s pension reform panel will be able to find a part of the solution to Illinois government’s mounting financial crisis. But, he said, it will not be easy.

“A tough process? Yes, I anticipate it being very difficult,” Noland said Wednesday during a phone interview. “There’s going to be input from many different stakeholders — those invested in the five different pension programs we’ll be looking at. It will be a crucible of debate.

“This is a very sensitive issue … actually it’s central to balancing our budget,” he said. “We need everyone to come into this with an open mind, focus on facts, put aside the emotions and politics … we may be able to accomplish something very significant here. This is an opportunity for all of us to participate in a process that can result in something positive.”

Noland said he is entering the process with no preconceived ideas about how it will be resolved.

“Right now we’re in the listening stage, receiving information from all stakeholders,” he said. “We want to understand all sides, then look for solutions. … there are no conclusions or suggestions on the table yet.”

He said he is approaching the issue “with a set of new eyes” to learn what can be done from both the revenue and spending perspectives.

Noland said he believe his legal background and knowledge of constitutional issues, as well as his fiscal background, will prove invaluable to him during the process. There are key issues that need to be resolved, both legally and fiscally.

“We need to maintain sovereign solvency,” he said, explaining that the state is constitutionally obligated to protect state employees’ pension benefits that already have been earned. In a release last week, he said that mandate must be reconciled with the U.S. Constitution and the need to avoid bankruptcy at the state level.

There are reasons for optimism, Noland said. He pointed specifically to Rhode Island and Vermont, which have negotiated pension reform laws for their state employees. While they are much smaller states that have fewer employees and markedly smaller budgets than Illinois has, Noland said they still succeeded at bringing a variety of stakeholders to the table to negotiate some level of reform.”

“They were able to reach an accord with labor, the business community and legislators,” he said.

In a release last week announcing his appointment to the pension reform panel, Noland noted that Illinois has the worst-funded pension system in the nation, with only about 43 percent of the funding needed to pay retirement benefits to state workers and teachers. By contrast, the federal government recommends states keep their pension systems at least 80 percent funded.

For decades, his release stated, the state has failed to make its full payment to the pension funds as state employees have. As a result, today’s state debt to the pension system is eating up an increasingly larger portion of the budget, affecting funding levels for education, public safety and health care.

In the 1990s, then-Gov. Jim Edgar signed into law a reform bill that came to be known as the pension ramp, which aimed to bring the state’s pension funding to 90 percent by 2045, Noland’s release stated. The payment schedule required successively larger payments over the years to meet that goal, but lawmakers failed to make the full payments.