CHICAGO – State worker pensions now cost Illinois taxpayers more than 25 percent of the state's annual budget, but still, it's just not enough.
A new report from the Commission on Government Forecasting Accountability found that in the past year, Illinois’ pension debt grew to $130 billion, up 17 percent from 2015.
And if that debt explosion isn't troubling enough, the report also found that the state’s five pensions funds now have less than 38 cents on hand for every dollar needed today to pay out future benefits.
According to Fitch Ratings, Illinois’ pension plans are the worst-off in the nation.
“Now more than ever, this shows that the state’s pension math doesn’t work,” said Ted Dabrowski, vice president of policy at the Illinois Policy Institute. “It doesn’t work for struggling taxpayers who are forced to pay more and more into the pension funds. It doesn’t work for the poor and disadvantaged who are seeing core services cut. And it doesn’t work for state workers whose retirements are at risk.
“Lawmakers have no excuse to continue ignoring Illinois’ crippling pension crisis. They can immediately implement reforms that don’t require changes to the Illinois Constitution, including putting all new government workers on 401(k)-style plans and providing optional self-managed accounts to existing workers.”
Taxpayers are already on the hook for over $1 billion in extra contributions to the pension systems in 2018, which will result in greater cuts to core state services. Without reforms, these costs will only continue to rise.
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I ran an idea past a pro-union democrat precinct committeewoman the other day. She actually liked the idea of an IL Constitution amendment to stop the automatic COLA payments on pensions until the funds are solvent. The idea has bi-partisan support (ok, limited sampling) But, it would go a long way toward solving Illinois liabilities with minimal impact on the pensioners. All we need to do is to convince Madigan to put it on a ballot, then convince the taxpayers that the choice is theirs – pass this or pay far more in taxes.
Jan, what you are proposing violates the Bill of Rights of the U.S. Constitution, Article 1, Section 10 of which specifically bans ex-post-facto laws and laws impairing the obligation of contracts. The pension AAI (it is not legally a COLA) for an existing employee or retiree is a contractual right that was (at least partially) paid for by a specific, dedicated portion of the employee’s own contributions to each pension system. It can be cut for new employees, but not for those who are already contributing members of one of the pension systems. You cannot retroactively eliminate a contractual right – which is, of course, a pity, because if we could our $18+ Trillion Federal debt burden would be so much easier to bear (sorry bondholders: no interest payments for you until our country’s financial situation improves….)