\n\t\t\t\tActuaries say Illinois needs to put in $17 billion a year to fix the plans, but the 2027 plan calls for far less.
\n\t\t\t<\/p>\n
Gov. J.B. Pritzker\u2019s proposed budget gives Illinois\u2019 five state retirement systems $5.4 billion less than what actuaries say they need.<\/p>\n
House Bill 0131<\/a> and\u00a0Senate Bill 2512<\/a>, which contain the proposed budget for fiscal 2027, would appropriate about $11.6 billion to contributions for the five systems. These payments are required by a 1995 state law <\/a>known as the \u201cEdgar Ramp.\u201d<\/p>\n But while that would satisfy the legal requirement, it would not \u2014 by a long shot \u2014 meet the fiscally responsible requirements determined by the state\u2019s actuaries. They say the state\u2019s pension plans need just over $17.02 billion<\/a> this year \u2014 and annually for the next 20 years \u2014 to fully fund the system and begin paying down the state\u2019s pension debt. That\u2019s almost $5.4 billion more than proposed in the fiscal 2027 budget.<\/p>\n<\/p>\n For every year the state fails to make a full, actuarially determined contribution, more money will be needed from taxpayers to pay down the debt. In 2023, COGFA determined that $14.9 billion<\/a> a year for 20 years would be enough to pay down the debt. That increased by more than $2 billion to $17.02 billion in its most recent report.<\/p>\n The state\u2019s pensions shortfall, or the difference between what the state puts in and what actuaries deem sufficient, has grown, too. In 2023, the difference between statutorily required contributions and the actuarially determined amount was $4.1 billion<\/a>, more than $1 billion less than the $5.4 billion proposed for fiscal 2027.<\/p>\n Illinois also double-dips taxpayers for pension expenses. Each employee in the systems is meant to contribute to their retirement benefits. But for certain members of the State Employees Retirement System, taxpayers will cover some or all of that amount.<\/p>\n The proposed budget puts that total at close to $7.6 million for these \u201cpension pickups.\u201d<\/p>\n<\/p>\n All of this adds to a debt that becomes harder and harder for the state to manage. The debt, or unfunded liabilities, for fiscal 2025 was $143.5 billion<\/a>. Illinois is the only state<\/a> that allows unfunded liabilities for state-managed pension systems to surpass $100 billion.<\/p>\n The funded ratio for the five state systems sits just below 48%<\/a> because of the high unfunded liabilities. Experts warn<\/a> that pensions with funding ratios below 60% are deeply troubled and that plans below 40% are likely past the point of no return. Below 40% makes it harder to prevent insolvency, which could lead to significant benefit cuts.<\/p>\n The five Illinois systems regularly rank<\/a> in the 10 worst-funded government pension systems nationwide. It\u2019s imperative that lawmakers consider balanced solutions<\/a> that take the concerns of public employees and taxpayers into consideration.<\/p>\n A constitutional amendment would allow modest adjustments to yet-to-be-earned benefits, delivering sustainable retirement incomes for public servants, allowing for the continued provision of vital services and staving off the threat of perpetual tax hikes. Expanded buyouts and optional 401(k) plans could also help reduce the debt and create more choice for retirees.<\/p>\n","protected":false},"excerpt":{"rendered":"
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