Financial State of the States 2021

Link:https://www.truthinaccounting.org/news/detail/financial-state-of-the-states-2021

Full PDF: https://www.truthinaccounting.org/library/doclib/FSOS-Booklet-2021.pdf

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Unfunded retirement liabilities
are the largest contributing factor
to the $1.5 trillion in state-level
debt. One of the ways states make
their budgets look balanced is
by shortchanging public pension
and OPEB funds. This practice
has resulted in a $926.3 billion
shortfall in pension funds and a
$638.7 billion shortfall in OPEB
funds

Author(s): Truth in Accounting

Publication Date: September 2021

Publication Site: Truth in Accounting

OVER 100% OF DANVILLE MUNICIPAL PROPERTY TAXES CONSUMED BY PENSIONS

Link: https://www.illinoispolicy.org/over-100-of-danville-municipal-property-taxes-consumed-by-pensions/

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The average Danville household owns nearly $40,000 in state and local pension debt.

Illinois’ worst-in-the-nation pension debt has become a well-known problem. Over $144 billion in pension debt for the five statewide retirement systems breaks down to nearly $30,000 in debt for each household, which must be paid with further tax hikes or further cuts to core government services.

Less well known is the nearly $75 billion of pension debt held by local governments in Illinois, which is the primary reason for Illinois’ second-highest in the nation property taxes. Combined with the state’s pension debt, politicians who mismanaged the pension system dug a $219 billion hole.

In Danville, the average household owns nearly $40,000 in state and local pension debt, with over $10,000 of that debt stemming from local systems for police, firefighters and municipal workers. To pay off that pension debt, a Danville household would have to give up 110% of an entire year’s  $36,172 median annual income.

Author(s): Adam Schuster, Perry Zhao

Publication Date: 20 Sept 2021

Publication Site: Illinois Policy Institute

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