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Abstract

Evidence of state and local government dysfunction surfaces in many areas. One is the operation of employee pension plans. Free from the strictures of the Employee Retirement Income Security Act (“ERISA”), some state governments failed to adequately fund their pension promises. With the imminent retirement of the baby boom generation, these states are facing what appear to be insurmountable pension debts. Illinois is one of the worst hit states, with grossly underfunded pension plans, a state constitutional prohibition on reducing pension benefits, and a sizable non-pension-related budget deficit. Illinois courts will likely strike down recently passed pension “reforms.” There are no easy solutions to its pension woes, but this Article seeks to lay out a few steps that Illinois and other states can take now, under current law. This Article also suggests more long-term policy and legal changes that Illinois should consider for the future.

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