Moody’s: Illinois FY 2012 pension shortfall jumps to $187 billion

The same group that rates Illinois’ state bonds as the worst in the nation recently reported that Illinois’ pension shortfall jumped by $53 billion in fiscal year 2012.

Moody’s Investors Service said the funding shortfall of the state’s five pension systems – covering state workers, university employees, judges, legislators and teachers outside Chicago – now exceeds $187 billion. The rating agency reported the 2011 underfunding was $134 billion.

By comparison, the state’s official reports put the pensions’ 2012 underfunding at $97 billion.


The large difference between the numbers is in the ambitious investment returns the state’s pension systems assume they can earn in the future. The state funds expect to earn on average 8 percent per year. Moody’s uses more reasonable and lower rates based on corporate bond yields.

Moody’s reports that in addition to having the nation’s biggest pension shortfall at $187 billion, Illinois has the highest unfunded liability:

  • As a percentage of the state’s governmental revenues: At 318 percent, it’s five times higher than the nation’s 63.9 percent median.
  • As a percentage of the state’s personal income: At 31.7 percent, it’s nearly four times higher than the nation’s 8.1 percent median.
  • As a percentage of the state’s gross domestic product: At 26.9 percent, it’s nearly four times higher than the nation’s 7.2 percent median.

Illinois continues to be the massive outlier nationally when comparing state pension shortfalls. This means that no matter what savings numbers the Commission on Government Forecasting and Accountability comes back with on Senate Bill 1, it won’t be enough.

Ted Dabrowski | Vice President of Policy
Dedicated to getting the US back on track, starting with Illinois. Go big or go home.