Four months after pension law was signed, state government financial analysis arm releases audit of savings 

In early December 2013, a pension bill was rushed to the governor’s desk. Proponents claimed this legislation would cut Illinois’ massive pension debt by $160 billion over the next 30 years, but no official scoring of the bill was done to prove those claims. The Illinois Policy Institute, state Rep. David McSweeney (R-Barrington Hills) and others requested that the General Assembly postpone a vote on the bill until an actuarial study or financial review could be completed, but that request was denied and the bill was signed into law.

On Wednesday, the Illinois Commission on Government Forecasting and Accountability and Segal Company released a financial review of the December pension law. COGFA, Illinois’ financial analysis arm, and Segal Company found that the actual savings from the bill is $23 billion less than what was promised by proponents of the bill. The actual savings from the bill is $137 billion over the next 30 years, not the $160 billion promised by lawmakers.

“The pension bill passed last December did not save the pension system. This bill relies on backloaded savings and accounting gimmicks,” said state Rep. David McSweeney, who called for a fiscal review by COGFA of the pension bill before it was voted on. “We need to get back to work to pass a real pension bill that will help solve Illinois’ major fiscal problems.”

This pension law failed to reform Illinois’ broken pension system. According to COGFA:

• The December pension law saves the state just $137 billion, much less than the $160 billion that was promised.

• The December law does not provide immediate savings – more than 80 percent of savings from this legislation will occur after 2035.

• The state will experience less than $9 billion in savings in the next 10 years.

“Make no mistake, this bill was a step backwards. The official scoring proves it,” said Ted Dabrowski, vice president of policy at the Illinois Policy Institute. “Lawmakers need to enact true reform that will ensure a stable retirement for government workers and a stable economy for all Illinois taxpayers. Moving workers away from an unsustainable defined benefit system to a defined contribution system is the fair and lasting reform the state needs.”

McSweeney added that the COGFA analysis shows only 6.4 percent of the projected savings will occur over the next 10 years. Amazingly, 82.3 percent of the savings are projected to occur from 2035-2045.

The COGFA and Segal Company report is available online

An Illinois Policy Institute analysis is available online

FOR INTERVIEWS:  Nathaniel Hamilton (312) 346-5700 ext. 202