Those government retirement systems are sitting on mountains of debt. There’s $144 billion in debt just in the five statewide systems, by the state’s conservative estimate, or $261 billion by a more realistic, independent estimate. They average only 40% of the funds needed to pay out retiree benefits long-term.
If you add in local pension debt, Illinois’ unfunded pension liability totals more than $200 billion by the state’s measure, and that amount grows every year. Another shock such as the Great Recession could cause the first pension fund to run out of money by 2039, according to actuarial analysis.
That amounts to a broken promise not only to retirees who are banking on having their pensions to support them, but also to the taxpayers who continue getting hit with higher taxes just to keep things from tanking.
Illinois politicians have enhanced benefits without funding them and pushed off the financial reckoning for decades. As a result, pension costs, which took up just 4% of the state’s budget in the 1990s, have increased by more than 500% during the past 20 years, growing to consume more than 25% of budgets in recent years – rapidly approaching 30%.
Stein’s Law: “If something cannot go on forever, it will stop.”