MOODY’S REPORT: ILLINOIS PENSION DEBT REACHES RECORD-HIGH $317 BILLION

Link: https://www.illinoispolicy.org/moodys-report-illinois-pension-debt-reaches-record-high-317-billion/

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Because the state systemically underestimates its pension debt, it also underestimates the taxpayer contributions necessary to keep the debt from growing each year. During the past decade, officially-reported growth in pension debt outpaced the state’s initial projections by $24 billion. Growth in annual taxpayer contributions exceeded state estimates by about 15% per year on average, causing taxpayers to contribute $7.6 billion more than projected during the decade. Still, that extra money has not slowed a mushrooming pension debt. The state’s regular upward revisions demonstrate Moody’s method, which is more in line with private sector standards, is more accurate.

Because employee contributions to the pension funds and benefits paid out are both fixed by state law, taxpayers must make up for any shortfall caused when investment returns miss rosy targets. For example, the largest of Illinois’ five state pension systems, the Teachers’ Retirement System, reported a 0.52% return on investment in fiscal year 2020, which included the first four months of the COVID-19 pandemic. That was far short of the TRS’s 7% return target and helped grow the debt.

Author(s): Adam Schuster

Publication Date: 5 March 2021

Publication Site: Illinois Policy Institute

ILLINOIS HOUSE SPEAKER UNWILLING TO TAKE VOTERS’ ‘NO’ ON ‘FAIR TAX’ FOR AN ANSWER

Link: https://www.illinoispolicy.org/illinois-house-speaker-unwilling-to-take-voters-no-on-fair-tax-for-an-answer/

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Pension costs are already eating away at Illinois government services. The ballooning costs caused a nearly one-third cut since 2000 in core services such as child protection, state police, mental health and college money for low-income students.

Pension contributions accounted for less than 4% of Illinois’ general funds budget from 1990 through 1997 but have grown to consume 28.5% of the budget. Still, the pension debt has mushroomed to $144.4 billion by the state’s estimates, which more realistically was at an all-time high of $261 billion at the end of fiscal year 2020 according to Moody’s Investors Service calculations using more realistic assumptions. In any case, public pension debt is eating a larger chunk of Illinois’ gross domestic product than anywhere else.

Author(s): Adam Schuster

Publication Date: 25 February 2021

Publication Site: Illinois Policy Institute

MADIGAN WILL RETIRE WITH $2.9 MILLION PUBLIC PENSION AFTER CONTRIBUTING JUST $350,000

Link: https://www.illinoispolicy.org/madigan-will-retire-with-2-9-million-public-pension-after-contributing-just-350000/

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Because of a pension sweetener for politicians that Madigan helped create, the former speaker’s pension will spike more than $66,000 the year after his first full year of retirement, then grow 3% each year thereafter.

Former Illinois House Speaker Michael J. Madigan will start receiving $7,100 in monthly pension benefits starting in March, but just more than a year later his benefits jump 78% to $12,600 per month.

The next year will bring him $66,000 extra thanks to a special pension sweetener available only to politicians, which the former speaker helped pass. It was eliminated for lawmakers elected after 2002.

Author(s): Adam Schuster

Publication Date: 19 February 2021

Publication Site: Illinois Policy Institute

PENSIONS SET TO CONSUME 29% OF ILLINOIS’ BUDGET AMID $7 BILLION DEBT INCREASE

Link: https://www.illinoispolicy.org/pensions-set-to-consume-29-of-illinois-budget-amid-7-billion-debt-increase/

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Pension debt increased $7.1 billion to $144.4 billion in fiscal year 2020, according to the Commission on Government Forecasting and Accountability, or COGFA, the fiscal analysis unit for the General Assembly. The total cost of that debt burden to taxpayers in fiscal year 2022 will be nearly $11.6 billion, including:

$9.4 billion in direct contributions from general revenue sources

$1.1 billion in “other state funds”

$797.9 million in debt service costs on previously issued pension obligation bonds

$264.8 million towards the Chicago Teachers’ Pension Fund, or CTPF

Pensions will consume 28.5% of the budget. That is based on $38.5 billion in expected general revenue for fiscal year 2022, adding in that $1.1 billion from “other state funds” – which would go to critical programs were it not being used for pension debt.

Author(s): Adam Schuster

Publication Date: 17 December 2020

Publication Site: Illinois Policy Institute