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Between fiscal 1972 and 2003, the state of Illinois' unfunded
pension liability grew from $2.8 billion to a staggering $40
billion. Despite a record investment of $13.3 billion into the
pension systems over the past four years, Illinois' unfunded
liability is still one of the highest in the nation. Without
significant action, payments to cover the growing pension debt will
absorb nearly all anticipated natural revenue growth, leaving little
for important programs like health care and education.
"The state's pension debt has escalated through the past three
decades to an unmanageable level," Blagojevich said. "While we have
been making some inroads the past few years, it is crystal clear
that we must take drastic steps now to ensure that millions of
citizens who have spent their entire adult lives working hard can
continue to enjoy their golden years in retirement. I applaud the
Illinois Senate for acknowledging the crisis and committing
themselves to helping find a solution before pension contributions
grow so out of control that they will threaten the state's ability
to make any new education or health care investments."
Earlier this spring, Blagojevich offered a plan that would
address the state's most pressing structural deficit challenge by
injecting $26 billion into the cash-strapped pension system and
thereby reduce the existing pension debt by 60 percent. In his March
7 budget address, the governor proposed leasing the Illinois Lottery
and issuing pension obligation bonds, which would immediately
increase the system's funded ratio from 60.5 percent to 83 percent.
While Blagojevich supports his plan to enter into a long-term lease
of the lottery to cover the state's growing pension liability, he is
willing to consider proposals from members of the General Assembly
to address the problem. The resolution reads as follows:
WHEREAS, Article XIII, Section 5 of the Illinois Constitution of
1970 requires the State to provide pension benefits to members of
State-sponsored retirement systems; and
WHEREAS, the State of Illinois supports five retirement plans on
behalf of State employees, university employees, teachers, judges,
and members of the Illinois General Assembly; and
WHEREAS, it is the State's responsibility to provide adequate
funding to support State pension liabilities so that future
generations are not held responsible for current expenses; and
WHEREAS, deferrals of the State's obligations to its annuitants
contributed to an unfunded pension liability in State-sponsored
systems of $19 billion in 1995, which grew to $43 billion in 2003,
resulting in a funded ratio of 48% in 2003, the worst funded ratio
of any of the fifty States and significantly under-funded in
comparison to the national average of 91.1% among 101 public
retirement systems, according to the 2003 Public Fund Survey
conducted by the National Association of State Retirement
Administrators; and
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WHEREAS, because of this crisis, unless changes are made,
commitments to State employees will become a significant burden on
future generations; and
WHEREAS, annuitants of the State's benefit systems rely on the
security provided by pension benefits to meet their daily
necessities, including food, housing, and healthcare; and fairness
requires that Illinois keep its obligations and commitments to those
who have earned it and will work for it in the future; and
WHEREAS, over the next three years, in order to meet the
statutory funding formula, the State will be required to increase
annual contributions to the pension systems and debt service on
outstanding pension obligation bonds, reducing available State
resources to fund growth in other core services provided by the
State, such as education and health care, to less than $200 million
of natural revenue growth per year, representing less than one
percent growth per year in these critical areas; and
WHEREAS, further deferrals of the State's pension liabilities
will force future generations to pay billions of dollars in
additional interest on the unfunded liabilities of the State between
fiscal years 2008 and 2045; therefore, be it
RESOLVED, BY THE SENATE OF THE NINETY-FIFTH GENERAL ASSEMBLY OF
THE STATE OF ILLINOIS, THE HOUSE OF REPRESENTATIVES CONCURRING
HEREIN, that the State's pension funding system is in a state of
crisis, and that the State will continue to unnecessarily pay
billions in interest costs alone if the unfunded pension liability
does not receive an immediate and significant infusion of funding,
the General Assembly is in agreement that a solution to this crisis
must be adopted prior to adjournment of 2007 Spring Session of the
Ninety-Fifth General Assembly; this action is necessary to
adequately secure existing pension obligations, reduce long-term
interest costs on current obligations, more effectively manage State
funding requirements, and ensure that future new revenues will not
be consumed solely by escalating pension contributions.
RESOLVED, that the General Assembly shall enact any such
additional protections necessary to ensure that no further State
pension liabilities may be deferred to future generations of
Illinois citizens.
[Text from file received from
the
Illinois Office of
Communication and Information] |
