Recent pension reform solution hurts University

By Max Fisher

Motivated educators push students to succeed. 

It is this drive and passion for forming the minds of young adults that when wielded correctly by a professor can inspire students. However, how can professors be motivated when they look at their retirement outlook and see a shell of what it once was? 

Now, for the most part, professors do not go into teaching for the money. But when it comes to retirement, everyone, whether they are economics professor or auto workers, wants to know that they will be able to support themselves when they can no longer work. 

Professors need to have fiscal security, or they will go to other universities that can offer them that financial safety blanket. Because the Illinois House approved pension reform Tuesday, 62-53, University professors may suffer many financial cutbacks, which could lead to an exodus of great professors to other universities.

It is no secret that Illinois has an enormous burden of public debt. In fact, one of the largest reasons for this mammoth amount of debt is the nearly $130 billion in unpaid pension liabilities. These pensions pay out to public employees of the state, employees that include our professors here at the University. 

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As a public university, our professors’ pensions are funded by the state. If the state is hemorrhaging capital like it is now, then these pensions go unfunded. Here at the University of Illinois, we have a whopping $20 billion shortfall when it comes to pension liabilities. 

While it may be hard to see, bad pensions are also bad for students. If professors are less incentivized to stay here, or less motivated to teach at their highest level, then the quality and value of our education goes down. If the professors suffer, so could students.   

University President Robert Easter called the pension deal a “significant impairment to higher education in Illinois and, in particular, our ability to recruit and retain the kind of faculty and staff we need.” 

President Easter is right about professor recruitment and retention. Pensions are usually based on either voluntary salary contributions or a calculation based on salary and years of service or membership in the plan. Therefore, professors’ salaries are another part of this pension problem. 

If the University wants to maintain good pensions they have to allow for increasing professor salaries to compete with other universities. 

The University cannot risk losing great professors to other universities that can offer better pay and better pensions. This would lead to an overall decline in the University’s status as an elite research institution. The University currently ranks high among public universities being tenth in the nation according to Forbes. 

However, by offering higher pay, some professors’ salaries may go over the proposed salary cap of $109,971, which would affect their retirement payouts. Essentially, the prestigious faculty with the largest salaries, and therefore key contributors to the University, will not be given fair pensions.

The recently approved pension reform plan will make it more difficult to keep our professors at the University rather than going elsewhere where the pension situation is probably much better.

According to President Easter, there is an alternate route to pension reform that would work with the University. 

This plan is outlined in the “Six Point Plan” developed by the University’s Institute of Government and Public Affairs Office. Part of this plan includes an increase to the required contributions made by certain state employees, and in return the state would have certain funding commitments. While this plan is not perfect either, it offers a more palatable plan for the University. 

While this recently approved overhaul by the Illinois legislature may not be the most reliable, we also cannot keep the system as is. Clearly the debate on pension reform must continue because the proposed plan is not good enough. Nevertheless, changes like raising the retirement age are steps in the right direction. 

Either way, a fair pension system is essential for our professors if we want to keep them at the University, and sustain the high level of academic excellence that we expect as students.

Max is a freshman in DGS. He can be reached at [email protected].