There’s Nowhere to Go but…Down?: Illinois’ pension crisis
by Mark Cavers A new report from the Pew Center on the States takes a look at how each state is doing in funding their pension obligations. The report, based on data from fiscal year 2009, shows that Illinois had the lowest funding ratio, with 51% of our pension liabilities funded. The next closest state is...
by Mark Cavers
A new report from the Pew Center on the States takes a look at how each state is doing in funding their pension obligations. The report, based on data from fiscal year 2009, shows that Illinois had the lowest funding ratio, with 51% of our pension liabilities funded. The next closest state is West Virginia with a 56% funding ratio. Illinois is one of only four states with a funding ratio below 60%.
When we dig into the numbers, we see that this unsustainable situation has actually gotten even worse over the past year. According to a report by the Illinois Commission on Government Forecasting and Accountability (COGFA), Illinois now has over $138,794,300 in pension liabilities of which 62% ($85 billion) are unfunded. Illinois largest retirement fund, the Teachers’ Retirement Fund, has unfunded liabilities of $46 billion, or 41% of their total liabilities. Rather than improving, Illinois’s total unfunded pension liabilities actually increased by 10% between fiscal year 2009 and 2010.
To make up these shortfalls, the required pension contribution will continue to increase, taking up an even larger portion of the State’s budget in coming years. This year, the state will make $4.5 billion in pension payments, a number that is roughly equal to total state spending at the Department of Children and Family Services and the Department of Human Services. By fiscal year 2016, the required pension payment will increase to $6.25 billion. This $1.75 billion increase will need to be offset by cuts to other programs or through higher revenue. To prevent pension payments from continuing to crowd out other government programs, we will need to follow the lead of a host of other states, and update government workers’ pension plans for the twenty-first century.