State lawmakers looking to address Illinois pension debt with additional
$500 million
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[July 20, 2023]
By Andrew Hensel | The Center Square
(The Center Square) – Illinois legislators are discussing a measure that
aims to provide an additional $500 million a year for the state's
pension systems to address unfunded liabilities.
The state manages five pensions funds. The Teachers' Retirement System
covers retired teachers from across the state with the exception of
Chicago. Combined with TRS, the State Universities Retirement System,
the state Employees' Retirement System, the Judges' Retirement System
and the General Assembly Retirement System have an unfunded liability of
at least $140 billion. They are funded about 42% of what their overall
obligations are. The pension system for lawmakers is the worst funded at
about 19%.
House Bill 4098 would allow the Illinois treasurer and comptroller to
transfer $500 million from the General Revenue Fund to the Pension
Unfunded Liability Reduction Fund each fiscal year. The funds would be
used for making additional contributions to the pension funds for
retired state employees. The current budget already spends around $10
billion this year on pensions. That accounts for around one out of every
five dollars the state takes in taxes.
The House Personnel & Pensions Committee discussed HB4908 Wednesday in
downtown Chicago along with officials from the Teachers' Retirement
System and State Employees' Retirement System.
![](http://archives.lincolndailynews.com/2023/Jul/20/images/ads/current/guzzardos_sda_HEROS_2023.png)
The Teachers' Retirement System currently has a total unfunded pension
liability of around $80 billion among two different tiers of employees.
Tier 1 is for those in TRS before 2011. Tier 2, with fewer benefits, is
for those hired after 2011.
Andrew Bodewes of TRS told the committee if things stay the same, it
will be 2085 before TRS has no one left in Tier 1.
The State Employees' Retirement System is 44% funded.
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Illinois state Rep. Stephanie Kifowit,
D-Oswego
Greg Bishop / The Center Square
![](http://archives.lincolndailynews.com/2023/Jul/20/images/ads/current/bees_lda_HEROES_2023.png)
The most recent audit for the fiscal year that ended June 30, 2021,
shows SERS with around $30 billion unfunded liability, a funding ratio
of 42%.
State Rep. Steven Reick told The Center Square that this is the first
time since he's been in office that a plan for addressing pensions has
been formed.
"We're starting, and that is something that hasn't been done since I've
been in the General Assembly," Reick said. "We've actually taken the
bull by the horns and have started to actually make plans for how we are
going to fix this thing."
One issue legislators are evaluating is modifying the benefits for Tier
2 retirees. TRS officials stated that the Tier 2 benefit would not meet
the Social Security safe harbor benefit requirement, which could lead
school districts to make up the difference. That could put more pressure
on Illinois' already high property taxes.
During a committee hearing, state Rep. Carol Ammons, D-Urbana, said if
they don't address Tier 2 pensions, those employees could "take
recourse" against the state, which would result in "costing the state
more in the long run."
State Rep. Stephanie Kifowit, D-Oswego, told The Center Square that the
Tier 2 issues are being addressed through HB4098.
"This is the first time ever that we have had a bill that discusses Tier
2 to this depth," Kifowit said. "There's been side conversations, but
this is truly momentum going in the right direction."
Legislators plan to work on the measure throughout the summer and
attempt to get the bill read and passed during the next legislative
session. |