Posted on 12/16/2022 10:52:35 AM PST by george76
Illinois’ five statewide pensions system saw their debt increase by nearly $10 billion to a grand total of $140 billion in fiscal year 2022. Pensions will cost the state nearly $11 billion next year, but that’s still $4.4 billion too little.
Illinois’ state pension debt now stands at $139.7 billion, according to a new report from the Illinois General Assembly’s Commission on Government Forecasting and Accountability.
That is up $9.8 billion from 2021, when state pensions were benefitting from healthy investment returns. After markets cooled substantially, state pension debt in the fiscal year that ended July 1 continued to grow, increasing for the 11th time in 15 years.
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Despite growth in the Illinois’ unfunded pension liabilities, the state is planning on reducing pension appropriations in fiscal year 2024. Expected pension appropriations are scheduled to fall by $40 million based on the systems’ preliminary certification letters.
Plus, COGFA reporting shows state lawmakers are knowingly planning to underfund the state’s pension contribution by more than $4.4 billion in 2024. Illinois’ budget is expected to contribute nearly $10.94 billion to state pension systems in FY 2024 under P.A. 88-0593. However, the state retirement plans’ own actuaries determined contributions in the coming year would need to total nearly $15.37 billion to actually begin paying off the state’s pension debt under funding requirements pursuant to the Governmental Accounting Standards Board Statements 67 and 68.
The fact that Illinois’ annual pension contributions have historically been lower than actuaries said was needed is one of the major reasons why the state’s pension debt has continued to grow. Since the inception of the state’s current funding schedule in fiscal year 1996, the state has shorted the funds by $58.5 billion.
Meanwhile, missed investment returns, which were the primary driver of the increase in pension debt last year, have added more than $12 billion to the state’s unfunded pension liabilities since 1996. These figures are expected to grow in coming years, as Illinois’ statutorily required funding continues to be insufficient to pay off the state’s unfunded pension liabilities and a prolonged market downturn hamstrings investment income.
As unfunded pension liabilities grow, pension funding ratios, which are currently at 44% across Illinois’ five state systems, will likely fall. Experts warn that pensions with funding ratios below 60% are deeply troubled and plans with funding ratios below 40% are likely to be past the point of no return.
Lawmakers in Springfield must pursue pension reform in order to achieve retirement security for Illinois’ public servants. A “hold harmless” pension reform plan similar to one originally developed by the Illinois Policy Institute – based loosely on bipartisan 2013 reforms – could help to eliminate the state’s unfunded pension liability and achieve retirement security for pensioners.
Previous analysis showed changes such as capping pensionable salary, replacing cost-of-living adjustments with true cost-of-living increases and adjustments to realigning benefits with historical inflation rates would have saved the state $2.4 billion in the first year alone, and more than $50 billion by 2045. It would also fully fund the plans, as opposed to the state’s goal of 90% funding, to truly safeguard retirees’ benefits.
Without reform, Illinois’ unfunded liabilities will continue to grow and the state’s pension systems will become even leaner, putting the retirement of Illinois’ public servants at risk.
Why bother? The federal government will bail out their pension deficits with federal funds, just like it did recently for the Teamsters’ pension funds.
I think Illinois needs to raise taxes a whole lot more, right, residents?
Sickening.
No bailouts for lazy ass government employees. They need to feel the consequences of their decisions. Those that made better choices with their lives should not have their hard earned dollars forcibly confiscated to benefit the incompetent and lazy. Anyone that has problems with what I wrote, I suggest you stop living off the teat of real Americans and get a job in the private sector. You have no shame.
some time in 2023, when tax revenues collapse, unemployment rises, real estate prices drop, and corrupt blue states start to see BIG budget holes - expect congress / Fed.gov to announce a multi $$ Trillion "21st Century America Infrastructure Fund."
The ONLY question is what MSM slogan they will use to name this bailout of blue states. Nothing else is in doubt though - it will happen.
exactly.
There’s one for you, nineteen for me
‘Cause I’m the taxman
Illinois will likely expect the Fed to bail them out. I hope it doesn’t happen, because Illinois voters supported extremely generous state employee pensions. It was common knowledge in Illinois even 30-40 years ago that state jobs paid much better than the private sector, offered great benefits, and guaranteed extremely generous pensions. Illinois politicians handed out largesse like there was no tomorrow and earned the loyal support of state workers in return (similar to what Democrats do at the federal level). In a sane world, economic reality would force Illinois to renegotiate for more reasonable, sustainable pensions, not impoverishing pensioners but requiring them to live within what taxpayers can reasonably afford to pay for the services that were provided.
Wait a minute. Jelly Belly Pritzker just said in his winning campaign that he has balanced the budget these past few years. So how can Illinois possibly be in financial trouble!?! /s
Chump change, here in California it is 1.5 TRILLION!!!
Just tax the dang government pensions. Can even be progressive about it. Hit the rich progressives harder, the little guys not so hard. Hey they want to tax us non-union taxpayers for it after they’ve (like this year) taken what the actuaries said were needed as contributions and instead spent that on more current wages. They’d still be getting everything promised them, just less taxes. Same as we get. Doesn’t apply to private pensions, which followed all regulations and paid all along as the actuaries required.
Nothing that the Democrats can’t fix with some of your federal tax money.
It can be fixed if you just click your heels and say Beetlejuice Beetlejuice Beetlejuice!
The shit hole that is Illinois is much like the problem in Georgia, one huge democrap stronghold city that controls everything in the State, including elections. Until States like this can figure out how to rid themselves of their democrap boat anchor, they are doomed.
and that should be criminal, taxation without representation in that state if I have to pay.
All he needs is some more lockdown money from the federal debt to keep the Pritzker/Ponzi scheme going. I wonder how much of the existing Illinois pension fund got invested in FTX.
RE: I wonder how much of the existing Illinois pension fund got invested in FTX.
Good question for Adam Adrzejewski.
Adam Andrzejewski – Open the Books
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