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Weekly Review Forward the Weekly Review using the forward link at the bottom of the page!
May 12, 2009
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State Retirement Systems |
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Funding the State Retirement
Systems: Comparison of Governor Quinn's Proposal and the Current System To eliminate part of the deficit for fiscal years 2009 and 2010 Governor Quinn has proposed a mix of reducing the required state payment by almost $3 billion and establishing a lower tier of benefits for new hires including:
According to COGFA's actuary, beginning in FY 2011, State contributions under the Governor's budget book proposal are lower than under the projections with current benefits. Under the current funding and benefit plan, in FY 2011 the unfunded liability would be $86 billion and the funded ratio 37.7 percent. Under the Governor's proposal, in FY 2011 the unfunded liability would be $88.7 billion and the funded ratio 35.6 percent. The funded ratio remains lower under the Governor's budget book proposal than under current benefit plan for all years except 2045, when it hits 90 percent. The reason for this is because of the nature of the current funding plan combined with the nature of the proposed benefit changes. Under the current funding plan, State contributions are made as a level percentage of payroll in order to attain a 90% funded ratio by the year 2045. Under the Governor's budget book proposal, retirement benefits would be reduced for newly hired employees. Therefore, the total actuarial liability by the year 2045 is also significantly reduced. The level percent of payroll state contribution needed for assets to reach 90% of this reduced total actuarial liability is therefore also lower under the Governor's budget book proposal. Because the reduction in benefits applies only to newly hired employees, there is very little change in the total actuarial liability in the near future. Thus, the combination of lower state contributions with very little change in total actuarial liability in the near future is resulting in lower funding levels than under current benefits. COGFA's actuary has determined that the current funding plan is not an appropriate one for the Governor's proposal to reduce benefits for new employees. A more appropriate funding plan would be one where each year the state would contribute an amount equal to the employer's normal cost plus the amount needed to pay off the unfunded liability as a level percent of payroll over a period of 30 to 40 years. The amortization period could be a rolling 30 or 40 year period so that the unfunded liability is never totally paid off. In this way, the funded ratio can be expected to attain approximately 80% to 90% by the year 2045, similar to the current funding plan. By paying the employer's normal cost each year, the State would be paying the cost of benefits earned each year and not a reduced amount on account of expected savings in future years. View the full report here including actuary tables comparing the current funding plan to the Governor's proposed plan. |
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From the Capitol |
Senate and House Schedule The General Assembly has 19 days to finalize the FY 2010 budget and implement a much needed capital plan. May 31 is the last day of regular session. View the Senate schedule here View the House schedule here Read CTBA's analysis of the FY 2010 proposed budget here View Resources from CTBA's 2009 fiscal symposium here |
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Calendar |
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WHAT: The 2010 Governor's Proposed Budget: What Grantmakers Need to Know WHEN: June 17, 2009 10:00 a.m. to 12:00 p.m. WHERE: Donors Forum 208 S. LaSalle, Suite 1540, Chicago, IL 60604 INFO: Donors Forum is hosting a briefing for funders about Governor Pat Quinn's proposed budget for fiscal year 2010. A panel will offer insights about the short and long-term implications of the proposed budget to both grantmaking and nonprofit organizations in the communities they serve. In addition, key legislators will share their perspective and discuss the current state of the General Assembly in light of new leadership. Panelists include: Ralph Martire, Executive Director, Center for Tax and Budget Accountability (confirmed), State Representative Kathy Ryg (D-59) (confirmed), Ginger Ostro, Director of the Governor's Office of Management and Budget (invited); Grace Hou, Assistant Secretary of the Illinois Department of Human Services (confirmed). Larry Suffredin, attorney and Cook County Commissioner (confirmed) will provide an overview of the proposed state budget and Larry Hansen, Vice President of the Joyce Foundation, (invited) will moderate the event WHAT: Dupage Federation on Human Services Reform, Making the Connection: Accessing Public Benefits for Low Income Persons WHEN: October 1, 8, 15, 22, 29 February 18, 25 March 4, 11, 18 June 3, 10, 17, 24 July 1 WHERE: All trainings held at NIU Naperville, 1120 Diehl Road, Naperville, IL INFO: Making the Connection training sessions contain information in an easy-to-understand format regarding many programs available to assist low income persons. Individuals who register for a Making the Connection training session now receive membership access to the Federation's newly developed Making the Connection Illinois website, www.mtcil.org. To register and for more information please visit www.dupagefederation.org. |
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Do you have something to add to the Weekly Review? email Chrissy Mancini @ cmancini@ctbaonline.org ___________________________________________________________________________ Center for Tax and Budget Accountability 70 East Lake Street, Suite 1700 Chicago, IL 60601 312-332-1041 www.ctbaonline.org |
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