Illinois pension debt climbs as national economy improves

Revenue windfall, report on growing debt highlight state's predicament

By Cole Lauterbach
Illinois News Network

SPRINGFIELD – Estimates of Illinois’ public pension debt continue to climb despite the growing national economy.

The way Illinois’ pension debt is measured requires estimating future earnings, costs linked to the lives of public retirees and the state’s obligations to them. Stock market growth sends the debt down, for instance, while an estimation that the retirees will live longer can push the unfunded liability estimates higher.

The state’s Commission on Government Forecasting and Accountability estimates Illinois’ pension debt will grow to $136.8 billion next month.

That number has been criticized as too rosy because the state assumes decades of average returns on investments, which is not typical of the stock market.

Credit rating agency Moody’s Investor Services estimated the state’s debt load at $250 billion.

Actuary and pension expert Mary Pat Campbell said state lawmakers have chosen to pay less than required into the state’s pension systems for years, putting other spending priorities ahead of the looming debt.

“They are implicitly putting it on future generations,” she said.

In a report, COGFA said its estimate was predicated on the state making the actuarially required contributions to the pension funds. Campbell said that hasn’t happened in decades.

By only making what amounts to the interest payments on a personal credit card, Illinois, is risking a financial “death spiral” in the event of an economic downturn, Campbell said.

“What if we have another 2008?” she said. “If you think you can’t afford pre-funding the pension, wait until you have to do pay-as-you-go.”

Gov. J.B. Pritzker, who announced he wouldn’t short Illinois’ teacher retirement fund after the state collected $1.5 billion more in tax revenue than expected last month, has proposed restructuring the state’s pension payment schedule to pay less now and reach better funding ratios at a later date.

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