State of the state: 10 pension facts every Illinoisan should know

How bad the pension crisis really is, and why getting politicians out of the retirement business is the only way to solve it.

1. Illinois’ pension debt is so large that it would take three years of a complete government shutdown, during which the entire general fund went toward pensions, just to break even. That means no funding for schools, no money for public safety and nothing for health care and human services.

2. Illinois’ unfunded pension liability grew to more than $111 billion this year, according to official estimates. That’s more than a $48 billion increase just since 2009.

3. This $111 billion pension shortfall means the state has only 39 cents of every dollar it should have in the bank today to pay for future benefits. In the private sector, these funds would be deemed bankrupt.

4. The state’s pension payment for the current budget year totals $6.9 billion, and without reform, that pension payment will balloon to $7.6 billion for the 2016 budget year – an increase of $681 million.

5. Illinois politicians have looted and mismanaged public-employee pension funds for decades. The system is no longer sustainable or affordable. With or without SB 1, the pension-reform law currently being fought in the Illinois Supreme Court, the same politicians who got the state into this mess will continue to control and abuse the retirement security of public employees. There’s only one group of public employees in Illinois that have a way out of this plan – university employees. The State Universities Retirement System, or SURS, offers its employees a choice between a defined-benefit plan and a self-managed, 401(k)-style retirement plan. In 2014, a record 20 percent of SURS members chose to control their own retirements through a self-managed plan over the traditional pension scheme.

6. The pension clause in the Illinois Constitution is not absolute. Pension benefits should be entitled to the same protection as other contractual obligations of the state – no more and no less.

7. While SB 1 is tangled up in the courts, there are reforms Illinois can and should move forward with immediately that avoid constitutional conflict. Those reforms should include moving all new public employees to 401(k)-style retirement plans and giving current employees the option to opt out of the defined-benefit pension plan and control their own retirements with 401(k)-style plans.

8. States across the nation are giving public employees retirement freedom by swapping out their traditional defined-benefit pension plans for self-managed, 401(k)-style plans. Six states have passed 401(k)-style reforms just since 2008. Oklahoma passed a 401(k)-style reform bill in 2014.

9. Illinois’ municipal pension shortfall, excluding Chicago, has spiked to more than $12 billion from $1 billion in the last decade. Municipalities are suffering the consequences. They’re cutting core services, raising taxes and adding new fees to pay for increasing government-worker pension costs. The problem is local governments have their hands tied when it comes to pension reform. The Illinois General Assembly sets municipal pension laws with no regard to whether local budgets and taxpayers can afford them. It’s time to end state control over local pensions.

10. The Illinois General Assembly Retirement System, or GARS, is the state’s worst-funded pension system. GARS has only 16 cents for every dollar it should have in the bank today to pay for benefits. To put that into context, the system only has enough assets to pay benefits for another 2.5 years. Illinois politicians should lead by example and swap out their traditional defined-benefit pension system for self-managed, 401(k)-style plans.