Illinois can save millions in legislator costs AND attract more candidates

You read the title right. Herein I have a plan that would save Illinoisans more than $18 million a year, and simultaneously make running for the State Assembly a real possibility for far more of the state's residents. Less cost to taxpayers and healthier election options across the state. It isn't even terribly complicated to implement.

Legislative bodies, whether the US Congress or the state assemblies, are not the most popular political entities nowadays. Surveys asking how well the United States Congress is doing it's job have recently pegged their approval rating at near 25%, which amazingly is a alight trend improvement. There isn't much in the way of recent data for state bodies, but one broad study indicates that 90% of them are underwater, with Illinois coming in at a dismal 20% or so. To no one's surprise, states like Illinois that have deep structural budget and debt problems, are especially disliked.

Within the context of this public frustration, the residents of Illinois and many other states chafe at the idea of their legislators being paid relatively large sums of money in salaries, pensions and health care benefits, among other perks. The internet is awash with memes throwing down theoretical gauntlets involving withholding legislators' pay until they can [insert seemingly basic job expectation]. Current remuneration and benefits vary widely from state to state - salaries range from $10k to $110k, most but not all states offer some sort of paid/assisted health insurance, and similarly most pay a per diem rate per session day to cover travel and lodging.

Here in Illinois, our state representatives and senators are compensated as follows:

• Base salary (source): $67,836/year

• Additional pay for leadership roles (source): $10,000 to $27,000 more per year, across 121 roles (roughly two thirds of the entire joint body)

• Per diem (source): $111/session day (nominally for housing and other location costs)

• Mileage reimbursement (source): 39 cents/mile

• Health care coverage (source): Legislators pay roughly $1900/year for health and dental combined, while taxpayers foot the other roughly $7300/year.

• If they serve for 8+ years, they can remain in that health plan for the rest of their lives. So that's another $7300/year for any legislators with that tenure who elect it. (source)

• Other benefits while in office: Life and disability insurance and vision coverage available (source)

• Retirement plan (source): Legislators pay in about 11% of their salaries. What they get later depends on years of service, starting with 3% of final salary per year of service up to a maximum of 85% of final salary. The cost of the General Assembly Retirement System (GARS) to taxpayers is a combination of those actual costs, plus the annual "bailout" funding to keep the system from collapsing, and comes to about $22 million per year.

Add all of that up and the cost of legislator compensation to Illinois taxpayers is about $18 million per year for active lawmakers, plus another $21.7 million per year for the pension system. The retirement health care is harder to calculate because it is elective and seniority-based, plus the state doesn't seem to publish that number. But even if only 200 retired legislators (roughly equivalent to the total number currently serving) decide to take it that would be another $1.4 million. That's about $40 million a year in total at least and could be higher. And the number will only go up because that pension system also has a sweet automatic 3% increase in benefits each year regardless of actual inflation.

Now what if I told you there was a way to cut those costs in half over time, reduce the incentive to stay in the Assembly forever, *and* create an environment where far more Illinois taxpayers could realistically afford to run for the General Assembly and shake things up?

I'll open with this, and it might not be popular, but stay with me for a minute. Being a legislator in Illinois is functionally a full time job. We need to be realistic about this. On average, the Assembly is in session for about 70 days each calendar year. That alone is 14 working weeks. Now add in that these legislators spend at least as much time working in their districts as in Springfield, and that's 140 days, or 28 working weeks. How many jobs do you think are reasonably available to people that allow them work half the days in the year, getting to pick precisely which days?

The answer is a key problem. There are a few jobs that can dovetail with - lawyers, corporate board members, doctors with their own practices, independent business consultants in high demand, and people who sit on stupendous stacks of cash. In other words, very wealthy and well-connected people. For nearly everyone else, the salary and benefits need to be in the ballpark of what they were making before, or else they are taking a pay cut.

Considering the current base salary for legislators is below the median household income for the Chicago metro area (where two thirds of the population, and therefore representatives, reside), more people would be in that pay cut zone than not. And that doesn't even consider that candidates who have a real shot at winning a seat will generally need to take a few months off just to campaign before (and if) they get there, and then potentially face an extended period after leaving office without an income. Would you want to run for a job that required a pay cut and put you on the road half the time, in a role that by any fair reckoning is an uphill battle where 90% of your customers despise your work?

Let's make the job a job, and make it an even-money transition. Get rid of the flat salary and replace it with a gradient range. Any incoming Representative or Senator will be paid what they earned (as reported on their taxes from salary alone) on average over the last three full years. But the range will be bounded - let's start it at $50,000 to $200,000 for now. If they averaged less than 50k, they get 50k. If more than 200k, they get 200k. The top and bottom numbers in the range and their incoming average are auto-adjusted annually based on actual market basket inflation levels in Illinois, as opposed to hard-coded numbers. Similarly their salary if in between will also go up by that percentage each year.

Let's assume the average ends up around the mid-point of the range (125k), which seems a safe assumption since it is substantially higher than the state or metro average. The current average with the bonuses is around 82k. So we have increased the cost to taxpayers by $5.8 million.

Wait wait wait, isn't that going the wrong direction if we want to cut costs? Yes it is. You see to make the magic happen, there has to be a give and take, and what I gave you first is the financially bad news. The good news side of the above though, is that it should now be financially practical for most residents of Illinois to run for one of these offices. No longer will our candidates be restricted to a narrow group of wealthy people with time on their hands. More candidates means more choices, and should give us better leaders.

With that established, here is the part where we save the taxpayers of the Land of Lincoln some money.

While I think it is important we acknowledge the functionally full-time nature of the job, the compensation for said job should stop when the work stops. Most people in Illinois have access to Social Security and Medicare, and some get the benefits of a 401k or similar retirement plan. Let's get the Assembly on the same page. Here are the proposed measures:

• Kill the pension plan. All currently earned balances/owed funds and positions to be transferred to a 401k plan, subject to all the standard rules thereof. 401k to include a 3% match, more or less in line with business standards for your average white collar gig. That match would cost roughly $700k assuming all of them maxed it out. Meanwhile we save $21.7 million from killing off the pension plan. Total savings: $21 million per year, though a ramp-down period of say five years for those currently drawing would seem reasonable so that retirees have time to adjust their budgets.

• Remove the committee chair and other leadership role stipends. The adjusted salaries should remove the need for this bonus-like compensation. The real draw of those roles should be the ability to influence policy, not make more money. Savings: $1.5 million per year, with immediate effect.

• Remove the option to stay on the "special" health plan after serving. Instead provide only Cobra access if they want it, just like most businesses provide. Savings: at least $1.4 million per year, and possibly more, with immediate effect.

So where does this all put us financially? $5.8M in added salary expenses, but $23.9M in reduced retirement and stipend costs gives us a net savings of $18.1M a year to the Illinois taxpayer. It may be prudent as noted above to ramp down the pension promises over a few years, so maybe the savings start as only a few million a year, before ramping up to that eighteen million after a few years. The savings to taxpayers will only be larger after that, because we have removed the 3% auto-raise too.

We can save Illinois taxpayers $18 million or more every year, while also injecting healthy new blood into the legislative slates. More options for voters at less cost to taxpayers, and better aligning candidate motivation with the interests of the people of Illinois. Let's be realistic about the job but also demand our legislators' priorities are aligned with what is best for their districts and the state and not their pocketbooks.