Illinois is just the latest state to vote on legislation to overhaul public pension plans. Heather Kerrigan is a contributor with Governing Magazine. She says this year alone, state and local governments around the country have proposed more than 1,000 pieces of legislation to shore up pensions. And she says almost all of them face the same challenge.
“The main experiment right now that’s going on is how much shared risk states can get their employees and their unions, if they’re negotiating with the unions, how much they can get them to agree to because at this point although it may have been the state raiding the pension funds, it can’t bear the brunt of refunding all by themselves.”
Like Illinois’ bill, Kerrigan says the pension overhauls in many states follow a similar pattern… raising the retirement age, reducing cost of living increases and adding a 401(k)-style plan instead of only a defined benefit. Kerrigan says it will take years to determine whether any particular state’s approach is successful.