$1 million a day X 600 years to fill Illinois pension hole
Illinois has the highest pension debt per capita. Even if the state spent an extra $1 million a day, your distant descendants would still be paying in 2600.
Even if the state paid $1 million extra dollars every day to fund pensions, it would take about 600 years to fill the current pension hole.
The biannual report from the Illinois Department of Insurance Public Pension Division shows Illinois is weighed down by $493 billion in liabilities across 677 government pension plans. The average funding ratio across plans is 49%, meaning they have 49 cents on hand for every $1 they owe.
That comes out to over $218 billion in accrued benefits the state has no money to pay out.
The state is already paying $32 million dollars every day to fund just the five state systems.
Illinois has the second-highest net pension liabilities, right after California, and the highest net pension liability per capita, at nearly $17,500 per resident.
Even if the state were to pay $1 million extra dollars every day to start closing that gap, it would take 597 years before they were fully out of the current pension hole. That doesn’t even include additional pension debt that would rack up in the meantime, because pension systems aren’t fully paying what experts say is necessary to pay down the debt.
Instead, local governments are raising property taxes across the state to keep up with pension obligations, cutting the services those taxes should be paying for, and sometimes still going bankrupt. It doesn’t just trap taxpayers; the instability of these systems traps the public servants relying on the funds for their retirement. For all of these reasons, reform is necessary.
The state needs to seriously consider responsible solutions to get the pension debt under control, such as:
- Expanding pension buyout options to local systems.
- Allowing all pensioners to opt-in to 401(k)-style plans.
- Maintaining the cost savings of Tier 2 reforms by avoiding unnecessary benefit hikes.
- Amending the Illinois Constitution to enable lawmakers to create structural change that improves fiscal stability.
Enacting these reforms is a much better strategy than just throwing more money at the problem. After all, Illinois residents, their children, their great-grandchildren and beyond don’t have 600 years to waste.