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The American Legislative Exchange Council released its “Other
Post-Employment Benefit Liability” report, which ranked Illinois
46th in the country. It shows that Illinois has about $103
billion in unfunded post-employment liabilities. That is on top
of around $140 billion in unfunded pension liabilities.
The report details how much states owe in benefits to retired
public employees upon retirement outside of a pension. Those
benefits include health insurance, life insurance and Medicare
Supplement Insurance.
"The burden on taxpayers and competing state spending priorities
posed by defined OPEB plans will be substantial if there aren't
significant policy reforms," said ALEC Chief Economist and
Executive Vice President of Policy Jonathan Williams.
Nationwide, current unfunded state OPEB liabilities are more
than $1.14 trillion, or roughly $3,500 for every American man,
woman and child. Only four states have a higher amount than
Illinois, including Texas, New York, California and New Jersey.
Two states, Nebraska and South Dakota, have zero liabilities
after implementing defined contribution health care benefits.
“OPEB liabilities in many cases are much different than pension
liabilities because they are not protected by state
constitutions or by contract law,” said Williams.
OPEB plans have worse overall funding ratios than state pension
plans. With an average funding ratio of merely 13.46%, many have
no pre-funded assets whatsoever, allowing liabilities to grow
rapidly year over year.
“By ignoring the trillion-dollar OPEB problem, state
policymakers are putting promised benefits in jeopardy and
saddling taxpayers with hundreds of billions of dollars in
debt,” said ALEC Vice President of Policy Lee Schalk. “Making
the necessary OPEB reforms now allows state leaders to keep
their promises to everyone.”
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