By Andrew Thomason | Illinois Statehouse News
SPRINGFIELD — Illinoisans are on the hook for $203 billion in public-sector retiree debt, about a third of the state’s gross domestic product in 2011, according to a new report.
Illinoisans are on the hook for $203 billion in public-sector retiree debt, about a third of the state’s gross domestic product in 2011, according to a new report.
“Politicians keep talking about the state pension problem,” said Ted Dabrowski
, vice president of policy for the Illinois Policy Institute
, a libertarian think tank, said. “Really our problems are much, much larger than that.”
Illinois’ public pension system owes current and future retirees $83 billion more than it has in assets, but that is less than half the problem, according to the institute’s report released Wednesday
. Public sector retiree health care and pension systems also are facing:
- $15.5 billion in state pension obligation bonds;
- $54 billion in unfunded state retiree health-care liability;
- $38.2 billion in unfunded local government pension liability;
- $10.7 billion in unfunded local government retiree health-care liability;
- $1.9 billion in local government pension and benefit bonds.
A plan to curb the rising cost of the state’s public pension system by decreasing cost-of-living adjustments faltered this spring, but Gov. Pat Quinn
and lawmakers are continuing to try and hammer some solution out.
The public pension systems for municipal retirees are doing slightly better than the state’s pension system. While the state has an unfunded liability of about 55 percent, or $83 billion, local governments, including Chicago and all tangential pension funds, have a combined unfunded pension liability of 44 percent, or $38 billion, according to the report.
Beyond the fragile state of public pensions, the state is on the hook for $54 billion in retiree health care. Unlike pensions, there isn’t a dedicated pot of cash and investments to cover future expenses. Instead the state pays these costs, which were approaching $1 billion annually, out of the general revenue fund.
Faced with such a staggering number, legislators passed a measure this spring that eliminates completely subsidized health care for state retirees and could save the state as much as $300 million annually.
Local governments have $10.7 billion in unfunded retiree health-care liability, according to the report.
“It hasn’t been nearly as well documented as the underfunding of pensions,” Dabrowski said. “These liabilities are growing.”
The institute is calling for retiree health care to be phased out, but Robert Rich
, director of the Institute of Government and Public Affairs
at the University of Illinois,
said eliminating a benefit people have planned on isn’t fair.
Rich suggested creating funds to handle retiree health care cost as an option.
Dabrowski said cutting the $203 billion is going to be a difficult task because there isn’t one entity responsible for all public retiree benefits.
“You have this mix of who’s really accountable, who’s really in control of this stuff … In some cases it’s the state, in some cases it’s the locals,” Dabrowski said.