Illinois’ pension debt grows

[December 13, 2024]  By Greg Bishop | The Center Square

(The Center Square) – Illinois unfunded pension liability is growing.

The Illinois Commission on Government Forecasting and Accountability reports the latest unfunded liability is $143.7 billion. That’s $1.5 billion higher than last year and the second highest since 2020 when the total was $144.2 billion.

Wednesday, Illinois Gov. J.B. Pritzker said they’re doing good things with pensions.

“Our funded ratio for our pensions is much better today than it was when I took office and it continues to go in the right direction,” Pritzker said.

The funding ratio in 2019 was 40.3%. The most recent funding ratio was 46%. Actuaries suggest a funding level of 100%.

Wirepoints President Ted Dabrowski said even with investment markets at all time highs, it hasn’t been enough to shore up the taxpayer costs.

“That’s really the result of politicians having done zero to make things better for taxpayers,” Dabrowski said.

COGFA projects the annual taxpayer cost will grow from $11.2 billion this year to $18.5 billion by 2045. As the funding ratio continues to increase, the unfunded liability is expected to hold at around $144 billion until 2032 when it could drop to $139.2 billion. The unfunded liability would continue to decrease to $34.2 billion by 2045, with a funding ratio of 90%.

Dabrowski notes independent bond ratings agencies put Illinois’ liability much higher. He said it’s not just state government impacted by poor pension policy, but local governments are increasing taxes to pay for local pensions, and the state’s economy depends on reform.

“But right now we don’t send any good signals to the public, we don’t send any good signals to the rest of the country as far as us being an economic growth engine because we refuse to touch pensions,” he said.

The state’s pension system is protected by the Illinois Constitution's pension protection clause upheld by the Illinois Supreme Court and must be amended through voter referendum for costs to come down.