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History of pension funding shortfall explored: It’s gone on longer than you might think [UPDATED - 09/26/14]

The Great Pension DebateEarlier this year, Eric Madiar was asked a simple question about the state’s pension systems and their chronic underfunding. Madiar, the chief legal counsel for Illinois Senate President John J. Cullerton, was asked how long this underfunding had been going on.

That basic question sparked a research project that tracks records back nearly a century to find the answer and explore what it all might mean to current pension reform efforts. The final report was recently published at www.kentlaw.edu. You can read it here.

Madiar also summarizes his report in an accompanying op-ed.


For the past several years, one of the Illinois General Assembly’s primary focuses has been addressing the state’s unfunded pension obligations.

The issue is complicated: The Illinois Constitution has a clause specifically protecting public employees’ earned pension benefits.

The issue is contentious: Illinois’ public employees and retirees are understandably concerned about their retirement incomes.

The issue is important: Paying down the state’s pension obligations is expensive, and the money going to pay for pensions can’t be used to fund education and other areas taxpayers and lawmakers deem high priorities.

The purpose of this page is to catalogue important studies and publications relating to the legal debate over what the state can and cannot do to address its pension obligation. These are some of the key legal briefs and arguments the members of the General Assembly are using to craft pension legislation and to consider what they legally can and cannot do. Read on to learn in great detail what’s happening with Illinois’ public employee pensions.

• Review a comprehensive legal and historic analysis of the 1970 Constitution’s pension clause written by Eric Madiar, Senate President John Cullerton’s chief legal counsel. In this report, you will find a history of the convention debates and discussions, media perspectives of the time, what the courts have said throughout the past 40 years, as well as an analysis of recent arguments from Sidley Austin LLP and Gino DiVito.
Note: If you don’t want to read the whole thing, you can also review the abstract. If you want to know more, here are Mr. Madiar’s appendices.

• Read the full text of the 1905 speech given by Franklin MacVeagh, former President of the Commercial Club of Chicago and U.S. Secretary of Treasury, on the importance of honoring one's contracts, his views on labor unions, and other significant matters.

• In 2010, a number of respected lawyers and law firms released memorandums and analyses of Illinois’ pension situation. These documents are some of the most important items referenced in Mr. Madiar’s analysis:

• Read what law firm Sidley Austin LLP believes will happen if Illinois’ retirement systems go broke in this guarantor memo and this supplemental guarantor memo.

• Want to know if the General Assembly can force workers to pay more of their income for the same level of benefits? The law firm DLA Piper says no in this memo, and the law firm Jenner & Block says no in this memo.

• Learn more about the history of the pension crisis in this Chicago Tribune article from December 2013.