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the middle of 2022, the stock market had lost approximately 21.3
percent of its value. This has an impact on government finances,
as public pension systems rely on investment gains to help their
funded status.
A report by Truth in Accounting shows how the Illinois pension
system is affected by the U.S. stock market.
Illinois' public sector pension system is partially funded by
the investment returns in certain stocks and bonds. As the U.S.
stock market struggles, so does the Illinois' pension system.
Sheila Weinberg of Truth In Accounting explained how taxpayers
are being affected by the happenings on Wall Street.
“The taxpayer liabilities on these are volatile,” Weinberg said.
“If the market takes a hit, then the assets are worth less, and
therefor in the future, taxpayers could be asked to contribute
even more to their pensions to cover the gap.”
Illinois has among the most unfunded public pension liabilities
in the nation. While the state's auditor general has Illinois'
unfunded liability at around $140 billion, the American
Legislative Exchange Council recently put the figure at $533
billion. Nationwide, the number is $8.2 trillion.
This leaves many state workers with underfunded pensions and
results in the state making riskier investments, according to
Weinberg.
“The state will try to lessen the high liability of the system
by having more assets, so they have a tendency to take more risk
in their investment,” Weinberg said. “As we all know, the stock
market can be very volatile.”
Weinberg said even if the stock market does great, it can't make
up for Illinois' unpaid liabilities.
Andrew Hensel has years of experience as a reporter
and pre-game host for the Joliet Slammers, and as a producer for the
Windy City Bulls. A graduate of Iowa Wesleyan University and
Illinois Media School, Andrew lives in the south suburbs of Chicago.
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