Powerful teachers’ unions in Illinois are faced with a vexing problem in this year’s gubernatorial race: a Democratic incumbent they’re unhappy with, and a Republican candidate they view as a threat to the rights of unionized public workers.
The race in Illinois has the potential to be a test case for the political consequences of taking high-profile steps aimed at curbing pension obligations, at a time when many states are anxious about the long-term fiscal health of their retirement-benefit systems. Estimates about the unfunded liabilities across states vary widely, but the total nationwide ranges into the hundreds of billions of dollars. And Illinois faces the most acute unfunded pension problems of any state.
In Illinois’ case, public-employee unions are disappointed with Democratic Gov. Pat Quinn’s record because he signed a high-profile bill into law last year designed to curb pension costs—the unions have decried the move and swiftly sued to overturn it. And they have a troubled history in Chicago with his running mate, former Chicago schools chief Paul Vallas.
Meanwhile, the GOP candidate, businessman Bruce Rauner, is already an implacable foe of public-sector unions. He blames them for Illinois having the “worst-run government bar none,” and his presence, not Gov. Quinn’s, might be the key to boost union turnout for Democrats.
“Politically, the unions are in a tight spot here,” said Chad Aldeman, an associate partner at Bellwether Education, a think tank in Washington, who has co-written a report on state teachers’ retirement systems.
Broad Controversy
Public-employee pensions are touching off controversy elsewhere in the nation. For example, Maryland Gov. Martin O’Malley, a Democrat, has proposed shifting $100 million that the state legislature plans to set aside for state pensions to the general fund instead, an idea that’s been criticized by other state officials.
The Illinois gubernatorial race, meanwhile, is potentially among the more competitive elections nationally. In 2014, 36 states will hold gubernatorial elections. All but four states will also feature contests for their state legislatures.
Gov. Quinn has struggled with low approval ratings during much of his five-year tenure. The Cook Political Report, a Washington-based group of campaign analysts, has rated the Illinois gubernatorial race as a tossup, though the group says the state clearly leans Democratic.
The economic climate in Illinois hasn’t necessarily helped the incumbent. The state’s unemployment rate has consistently hovered above the national average. But Mr. Quinn’s most notable recent act was to sign a bill overhauling the state’s retirement system for public employees. Last year, the state’s Teachers’ Retirement System reported that it had unfunded liabilities of $55.7 billion, an increase of roughly $3.7 billion from 2012. (The teachers’ retirement system is the state’s largest public-pension plan.)
The law increases the retirement age for state workers younger than 46 on a graduated scale—every year a teacher is under the age of 46 adds another four months to their minimum retirement age.
Right now, before the new law takes effect on June 1, the minimum retirement age for a teacher with at least 20 years of service is 55. Under the new law, a teacher who is now 45 would be able to retire at age 55 and four months after at least 20 years of teaching. A teacher who is presently 31 years old or younger, meanwhile, would have to be at least 60 with 20 years of service in order to retire. It also puts a new cap on increases in cost-of-living adjustments, or COLAS; caps some workers’ pensionable salary; and excludes most “pension matters” from being collectively bargained.
On the day the governor signed the bill last December, the We Are One Illinois coalition of unions blasted it for violating the state constitution’s specific protections for retirement benefits and for enabling what the coalition called “pension theft.”
“Governor Pat Quinn has given hundreds of thousands of working and retired teachers ... and others no alternative but to seek justice for retirement security through the judicial system. Contrary to his belief, every Illinois citizen loses today,” the coalition said in a statement.
The union coalition then sued, and last month that suit and three other legal challenges to the pension changes were consolidated by the state Supreme Court into one lawsuit assigned to Sangamon County Court in Springfield.
In addition, Gov. Quinn’s choice of Mr. Vallas as his running mate has drawn the scorn of leaders like Karen Lewis, the president of the 30,000-member Chicago Teachers Union, an affiliate of the American Federation of Teachers. (Mr. Rauner picked Evelyn Sanguinetti, a former state assistant attorney general, as his running mate.)
Still, Cinda Klickna, the president of the 133,000-member Illinois Education Association—the largest teachers’ union in the state, an affiliate of the National Education Association, and part of the coalition suing the state—said that blame for the new law should be shared broadly by Democratic politicians who control state government. (Gov. Quinn’s campaign did not respond to a request for comment.)
Indeed, Ms. Klickna praised the governor for pressing for more K-12 funding. “There obviously is some concern about the pension issue and the governor’s role in that,” Ms. Klickna said. “But I would say that there’s a stronger view about Rauner’s comments about unions and education in general.”
Charters and ‘Union Bosses’
Consistently throughout his campaign, Mr. Rauner has railed against public-sector “government” unions and “union bosses” for squeezing the state for all the money they can, leaving taxpayers holding the bill.
“They wholly own the Democrat Party, but they also own parts of the Republican Party, too,” Mr. Rauner, who runs a private-equity investment firm, stated on his campaign website.
He wants state workers to be able to choose whether to join employee unions. He also supports changing the way retirement benefits work by using a “defined contribution” system in Illinois with no guaranteed level of benefits. (Defined-contribution benefit plans utilize regular employee contributions, and their benefits depend on the performance of the plans’ investments, rather than previously agreed-on benefits.)
“The teachers’ unions are facing a challenge to their status quo monopoly control of public education in Illinois,” John Tillman, the CEO of the right-leaning Illinois Policy Institute, said of Mr. Rauner’s campaign.
Mr. Rauner has been more sympathetic to private-sector unions, which could create a problematic split for the union bloc of votes in the state.
The Republican has extensive education connections to Chicago, including his position on the board of directors at the Noble Network of Charter Schools, which manages 14 schools.
In some ways, the Noble charter schools are a microcosm of arguments about charters and their relationships to tests and school discipline. Noble schools have been praised by the U.S. Department of Education and received a federal charter school grant, and their students have recently outperformed those from regular public schools in Chicago on the ACT college-admissions test. But the charters have also drawn criticism for fining students for minor disciplinary infractions like untied shoelaces, the Chicago Tribune reported in 2012.
Incumbent’s Prospects
Still, Mr. Rauner’s attacks on unions have become a core part of the campaign.
“His model is [Gov.] Scott Walker from Wisconsin. That, right there, says to our members, ‘Here’s a person who does not want to be collaborative,' " said the IEA’s Ms. Klickna. “I believe that our state is pro-labor. But I believe that the people in Wisconsin thought that way, too.”
However, Mr. Tillman said those expecting Mr. Rauner to reprise what Gov. Walker did in 2011 to gut the collective-bargaining power of public-sector unions would likely be disappointed. Mr. Tillman noted that Republicans probably won’t gain control of the Illinois legislature in the 2014 elections as they did in Wisconsin in 2010, just prior to that state’s collective-bargaining changes. Democrats control both chambers of the Illinois legislature.
Asked if she thought Gov. Quinn was a weak candidate, Ms. Klickna responded, “Somebody can put a strategy together and show leadership and run a great campaign. So I think in the next few months we’ll have a lot of information and we will know what people feel.”
Although Mr. Tillman said the union’s discontent with Gov. Quinn was largely “posturing,” he also argued that the governor has failed to build a unified political coalition.
But Bellwether Education’s Mr. Aldeman said the governor might survive despite the obstacles he faces.
Still, the challenge that Gov. Quinn and other state leaders face on the issue of retirement benefits is unusually difficult. Indeed, public-employee pensions are just part of a larger, long-term budget problem in Illinois with too little revenue to support current spending, even with a nominally temporary tax hike on the books, said Darren Lubotsky, an associate professor at the University of Illinois’ Institute of Government & Public Affairs.
“You still need to either raise taxes or cut spending in some other ways,” he said.
And state lawmakers must also prove that they’ll make the payments they need to resuscitate the retirement system if the new law is upheld, Mr. Lubotsky said, a critical failure in past years.
Even if Mr. Quinn wins re-election, he and other lawmakers won’t be able to simply take a victory lap with respect to pension reform, Mr. Aldeman said.
“Illinois is so bad that they’re going to have to keep working on this,” he said. “They’re not done.”
