The deficits have prompted calls to cut benefits, but workers and their unions reply that these promises were made in good faith — and written into contracts. It’s hard to disagree. Also hard to dispute are the concerns of state residents who point to an already heavy tax burden that makes it hard to provide for their families, let alone public employees. Finally, there are those who worry that essential services could be cut in any pension fix.
Can Pennsylvania address this problem without raising taxes, cutting services, or breaking promises? It’s possible, if an initiative in Illinois is any indication.
In 1998, Illinois lawmakers voted to raise teachers’ pension accrual rates, which meant teachers would earn higher benefits for their subsequent years of service. The legislation also gave teachers the opportunity to increase their accrual rates for previous years in exchange for a relatively small one‐time fee. For most teachers, the option was a tremendous bargain, made even more appealing by generous terms for the fee’s payment and because teachers could exercise the option at any time. Yet despite the terms, strong publicity, and the chance for a bigger payoff in the long term, a large number of teachers declined the offer.