Some may disagree, but I believe that this pension "crisis" the state finds itself in right now is almost completely bogus. And since Governor Rod Blagojevich has called what looks to be a never-ending special legislative session to deal with this problem, I figured I'd weigh in.

The 1994 law that supposedly "solved" the pension funding issue is not some holy writ handed down from on high. It was originally designed to make sure that the state's various pension systems were 90 percent funded by 2045. Both of those numbers are viewed by editorial writers, political reporters and many politicians as somehow sacred. They aren't. They're simply figures essentially pulled out of a hat thirteen years ago by a governor, Jim Edgar, who knew he wouldn't have to pay the price during his tenure.

The multibillion dollar ramp-up in pension payments the state budget has been experiencing over the past few years (caused by Edgar's bill, but which didn't begin until Edgar was safely out of office) is eating the budget alive. If nothing is done soon, all of the state's natural revenue growth will be diverted solely to pension payments and Medicaid. It's a frightening prospect, to be sure.

If Illinois was a small, private corporation in danger of eventually going out of business, then the 90 percent funding levels would be a good thing. The 90 percent level would ensure that no matter what happened to the company, worker pensions would be almost perpetually self-funding.

But Illinois is neither a small corporation nor in danger of going out of business. And the Illinois Constitution requires that state employees receive their promised pension payouts no matter the condition of the state's finances. A more reasonable figure of 75 or 80 percent would likely still guarantee a reasonable level of health, while not breaking our bank accounts now.

And what's with this 2045 number? Well, it looked good in 1994. The bill took effect in 1995, so a 2045 goal was exactly 50 years away. That's a nice, round number, to be sure, but as far as I can tell it has no real actuarial validity.

What we need right now is not necessarily a Lottery lease nor a new pension bond scheme, as the governor has proposed. Instead, that 1994 law ought to first be revisited and revised. Is a 90 percent funding rate prudent or is it a Cadillac dream on a Hyundai budget? Does the 2045 payoff goal truly make sense or could it conceivably be put off by another ten, twenty or even more years?

There is also the question, of course, of employee benefits. Politically, revising benefits downward for future employees may be too much to ask. Employee unions for state workers and teachers are just too heavily entrenched in both political parties.

But before we go selling valuable state assets like the Lottery for pennies on the dollar, everything should be looked at. First, put that 1994 law on the operating table to see what can be done with the numbers. Then, if necessary, bring the unions in for talks. Right now, all we're getting is overheated rhetoric from every possible side. A true compromise is needed that will make sure the pension funds are relatively stable and that they don't continue to devour near-term state budgets.

The governor claims, wrongly, that if his Lottery lease and bond sale ideas aren't approved then only two other options remain on the table - cutting pension benefits or coming up with an alternative revenue stream. He has cleverly framed the issue in a way that keeps up the pressure for a solution that his lobbyists pals will benefit from (sweet commissions on the Lottery lease and bond sale). Nobody wants to cut benefits for workers and nobody wants to raise taxes to bail out the pension funds. So as long as his false choice remains valid, he can get away with this little maneuver and make his arch nemesis House Speaker Michael Madigan, who opposes both pension ideas, look bad in the long run, which is probably what he's really trying to do anyway.

If the governor was truly interested in a pension deal, you'd think he would have already pushed his plan through the Senate, which is controlled by his ally Senate President Emil Jones. Instead, he let everything go until July before taking real notice. Color me skeptical.

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Rich Miller also publishes Capitol Fax, a daily political newsletter, and thecapitolfaxblog.com.