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Lawmaker: Illinois needs pension reform ‘like Rhode Island’

WPRI.COM

Ted Nesi

Updated: Jan 27, 2012 1:10 PM

Illinois Issues reports on how a top Republican in the Land of Lincoln – a state that faces a larger pension shortfall than Rhode Island did – is trying to get the state to rally around its own version of Raimondo-Chafee:

“We’ve talked about pension reform in this state until we’re blue in the face. We know what needs to be done. We know that other states have done what we need to do, like Rhode Island,” House Minority Leader Tom Cross said during a recent news conference.

It is fitting that Cross would cite Rhode Island as an example, since it is the only state that has in recent years taken some controversial pension reform steps similar to a proposal from Cross. David Draine, senior researcher for the Pew Center on the States, called Rhode Island’s reforms “the only [recent] example of a state that really changed the terms of pension benefits for current employees.” …

Rhode Island had one of the largest funding gaps in the country relative to its size. The state operated its fund on a pay-as-you-go basis from the 1930s until the 1970s.

“Pension systems with really severe problems often started out as ‘pay-as-you-go’ plans, in which retirees derived their benefits from current state revenues, not any pool of accumulated cash. Inevitably, the number of retirees grew, relative to the number of current employees, and the checks going out the door took up a larger and larger portion of state revenues,” said a study of state pensions from the Pew Center on the States.

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