Pension costs for state government workers reached an all-time high in 2016, consuming 25 percent of the state’s general budget.1 Today, more than $8 billion of the state’s yearly $32 billion budget goes to pay for pension costs, sapping tremendous amounts of money from social services for the developmentally disabled, grants for low-income college students, and aid to home...View Report
In 2012, the unfunded debt related to pensions and retiree health care costs for local and state government workers across Illinois was $203 billion, the equivalent of more than $43,000 per household. In just six years, the total debt Illinois households are on the hook for has jumped to $56,000, or 31 percent. That’s a $13,000 increase for each household. Total unfunded debt for state and local governments in Illinois now totals $267 billion.
More than 50 percent of the state’s $4.1 billion budget for public universities is spent on retirement costs alone.
A golden rule of finance is this: Debt that can’t be paid won’t be paid.
The head of the Illinois Municipal Retirement Fund, or IMRF, has dismissed calls for pension reform, disregarding the fact that pensions aren’t manageable, benefits aren’t affordable, and previous “reforms” propped up pensions on the backs of new workers.
Illinois households are now on the hook for $27,000, up 17 percent from 2015.
The ratings agency cited the city’s “considerable growth” in pension debt in its Oct. 28 downgrade to A3 from A1.
Former Gov. Jim Edgar’s pension compromise with House Speaker Mike Madigan in the 1990s set the state’s pension funds down an unsustainable road.
The ratings agency also warns that another downgrade could be coming if the state doesn’t enact serious reforms to improve its fiscal condition.
Another credit downgrade shows borrowing, taxes and bailouts can’t fix CPS’ financial crisis, but real structural reforms are needed.
Unlike the Illinois Supreme Court’s protection of the status quo, a California appeals court is allowing a pension reform law to move forward and potentially reduce that state’s pension burden.