Illinois taxpayers owe $203 billion in unfunded retirement debt, report says
By Greg Hinz
June 20, 2012
Another day, another report on how badly Illinois taxpayers are in
hock because of allegedly excessive worker pensions: in this case, a
cool $203 billion.
The report citing that eye-popping number comes
from the Illinois Policy Institute, a libertarian think tank that
certainly will win no medals from the Illinois Federation of Labor but
usually gets its numbers right.
According to the
institute, the most commonly used figure — $83 billion in unfunded
pension liabilities — applies only to what the state's five funds
collectively will owe that they don't now have assets to cover.
In addition, it says, the state still owes $15.5 billion on state
pension obligation bonds issued when Rod Blagojevich was governor, and
local units of government collectively have $38.2 billion in unfunded
Also, health insurance promised to
retirees has not been funded and will cost the state and local
governments an estimated $66 billion, the institute says.
I'd add a couple of big asterisks to some of those numbers.
For one, while the state does have to pay off Blago's POB, it is
using a portion of its normal annual pension contributions to do so, and
state pension funds invested proceeds of the POB long ago, increasing
Also, unlike the pension debt, the health
insurance payments are discretionary. If officials wanted to end free or
almost-free health insurance for retirees tomorrow, they likely could
do so legally, though doing so surely would set off a political storm.
Anyhow, the institute's solution is to cut pension benefits. It notes
that the total $203 billion figure equates to $41,000 per Illinois
No reaction yet from labor. But I do have a
reaction to a report I wrote about earlier in the week from the Pew
Center on the States, which said Illinois ranks 50th of the 50 states in
funding pension obligations and is falling further back.
The reaction to the report comes from the National Public Pension Coalition, which represents public-sector workers.
In a statement, it says it's "simply unfair to repeatedly punish our
teachers, nurses, police officers, and other public employees, many of
whom do not receive Social Security."
If current trends continue, it adds, retirees will be "pushed into poverty" and forced onto state-aid programs.
Concludes that group: "The bottom line is our politicians repeatedly
broke promises by failing to contribute the required amounts to workers'
pension plans, and then raided those funds for other purposes. It's
that same fiscal ineptitude coupled with Wall Street greed that drove
our economy off the cliff in the first place."
View the story at Crain's Chicago Business...