Illinois ranked among worst in the nation for pension health
 

[July 10, 2015]  By Warner Todd Huston | Watchdog Arena
 
 A new study of the health of the nation’s public employee pensions finds that Illinois ranks at the bottom of the list in nearly every category for pension solvency.

“Ranking the State by Fiscal Condition” by the Mercatus Center at George Mason University reviewed the pension plans of all 50 states and found that Illinois’s fiscal position was the lowest among all 50 states.

The study found that the state’s pension obligations are significant and that liabilities exceed total assets. The pension is further burdened by unfunded liabilities totaling $275 billion plus another $33 billion in bonded debt and $34 billion on unfunded post-employment benefits obligations.

Illinois ranks among the bottom five states with New Jersey, Massachusetts, Connecticut, and New York.

Senior Research Fellow Eileen Norcross, the author of the study, found that the state rates near the bottom in many of the categories used to determine pension health.
 

For instance, Illinois ranks 49th in terms of cash solvency, 43rd in budget solvency, 49th in long-run solvency, 45th in trust fund solvency, and 23rd in service-level solvency.

Jonathan Williams, the director of tax and fiscal Policy at the American Legislative Exchange Council (ALEC) recently noted that the organization uses Illinois as its worst case example.

Some efforts have been made by the state Legislature to solve the problem. But in May, the State Supreme Court rejected the Legislature’s most serious attempt clean up its pension mess as unconstitutional.

The main problem that the state faces is that pliant lawmakers in the state’s past actually added an amendment to the state constitution that makes it unconstitutional to make any changes at all to the pensions in Article XIII, Section 5.

“The problem is,” Williams said in an interview with Watchdog, “that governments too often play politics with retirement funds. We like to call it pension fund cronyism and it’s a really great reason why governments shouldn’t be in the pension business. It ought to be a private sector function and there are plenty of companies that can take on these pensions.”

Williams lamented that politicians all too often see pensions as a honey pot for government spending instead of a safety net for employees, and not just in Illinois.

This article was written by a contributor of Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists.