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Reforming Public Pensions Subject to Political and Legal Constraints: The Illinois Experience

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  • Jeffrey R. Brown

Abstract

On December 5, 2013, the Governor of Illinois signed into a law a bill that substantially reduced pensions for public sector workers in Illinois. Designed to partially address the severe under-funding problem created from many decades of inadequate contributions to the state’s large pension funds, the new law was negotiated in a highly constrained environment. Strong constitutional benefit protections and political constraints both imposed severe limits on the set of options available to the legislature. This paper discusses these constraints and how they influenced the shape of the final bill. It also analyzes the financial and legal implications of the reform for the state, public universities, and participants. Key Words: public pension reform, Illinois, retirement plans JEL Codes: H55, H72, J32

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  • Jeffrey R. Brown, 2014. "Reforming Public Pensions Subject to Political and Legal Constraints: The Illinois Experience," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(4), pages 941-964, December.
    • Handle: RePEc:ntj:journl:v:67:y:2014:i:4:p:941-964
    DOI: 10.17310/ntj.2014.4.09
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    References listed on IDEAS

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    1. Robert Novy‐Marx & Joshua Rauh, 2011. "Public Pension Promises: How Big Are They and What Are They Worth?," Journal of Finance, American Finance Association, vol. 66(4), pages 1211-1249, August.
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    Cited by:

    1. Jeffrey R. Brown & Richard F. Dye, 2015. "Illinois Pensions in a Fiscal Context: A (Basket) Case Study," NBER Working Papers 21293, National Bureau of Economic Research, Inc.
    2. Trang Hoang, 2023. "Public Pension Reform and Credit Quality of State Governments," Public Finance Review, , vol. 51(3), pages 368-431, May.
    3. Trang Hoang, 2022. "Fiscal competition and state pension reforms," Public Budgeting & Finance, Wiley Blackwell, vol. 42(3), pages 41-70, September.

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    More about this item

    Keywords

    public pension reform; illinois; retirement plans jel codes: h55; h72; j32;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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