Public Pensions

Released June 21, 2023

Illinois state government has the responsibility to fund five public pension systems: the Teachers’ Retirement System (“TRS”); the State Employees’ Retirement System (“SERS”); the Judges’ Retirement System (“JRS”); the State Universities Retirement System (“SURS”); and the General Assembly Retirement System (“GARS”). But what exactly does “funding” a public pension system entail?

According to the United States Government Accountability Office (“GAO”), to be considered financially healthy, a public pension system should have a “funded ratio” of at least 80 percent.  A “funded ratio” is determined by dividing the current monetary value of a pension system’s total assets by its total liabilities.

As things stand today, the state’s pension systems are decidedly not healthy. As of November 2022, the state’s five pension systems collectively had $248 billion in liabilities, but only $109 billion in assets to cover those liabilities. This results in a funded ratio across all five state systems of just 44 percent, or fully 36 percentage points below the standard for healthy set by the GAO.  It also means Illinois state government faces a significant, as in $139 billion, aggregate “unfunded liability”—read that as “debt”—owed to its pension systems. Which begs the question: how did the state get in this predicament?

The report, “Understanding – and Resolving Illinois’ Pension Funding Challenges” provides some insights into Illinois’ pension crisis by:

  1. Providing the historical context of how Illinois pensions became so underfunded;
  2. Explaining where the Illinois pension debt stands today;
  3. Clarifying that the debt service schedule created under the pension ramp is straining the state’s fiscal system—not the cost of funding benefits; and
  4. Providing a template for re-amortizing the pension debt in a responsible manner, that would save billions in taxpayer costs while getting all five pension systems healthy.

Released October 21, 2019

The state of Illinois faces a significant structural deficit into the future. The report highlights the nature of the structural deficit and identifies two key causes: the state’s historically flawed  tax policy and the plan devised for repayment of Illinois’ pension debt. CTBA proposes both the adoption of the Fair Tax and a reamortization of the pension debt as described in the report titled: Addressing Illinois’ Pension Debt Crisis With Reamortization. Doing so would allow the State to ensure full funding for the Evidence Based Funding Formula while also improving the status of Illinois’ public employee pension system and eliminating the State’s structural deficit by 2042.

Released October 21, 2019

Illinois' five state pension systems face a debt crisis after years of intentional borrowing from state contributions. The crisis is compounded by a backloaded repayment plan that calls for unrealistic, unsustainable state contributions in future years, putting funding for crucial public services at risk. Because the crisis is about debt, rather than benefits being earned by current and future employees, attempts to solve the problem through benefit cuts have failed. CTBA proposes resolving the pension debt crisis by reamortizing our payment schedule, creating a sustainable, level-dollar plan that saves the state $45 billion and gets the pension systems 70 percent funded by 2045. The state of Illinois has foregone $22 billion in savings since CTBA originally proposed to reamortize the debt in 2018. To bridge the higher contributions called for in the first several years of the reamortization plan, CTBA suggests using bonds to ensure current services do not have to be cut.

Released February 18, 2019

One idea that has been proposed by a number of observers to repay some of Illinois’ pension debt is an “asset transfer.” Under this proposal, the state (or the City of Chicago, which is also facing a large pension debt problem) would make a contribution to the pension systems in the form of a pub

Released May 21, 2018

Illinois' five state pension systems face a debt crisis after years of intentional borrowing from state contributions.

Released February 16, 2018

This week, Gov. Bruce Rauner gave his fiscal year (FY) 2019 budget address, revealing his revenue and expenditure proposals for the upcoming year. The governor’s proposal relies on $1.5 billion in cost reductions to balance the budget, including:

Released October 10, 2017

The changes made to Illinois public pension systems in Public Act (PA) 100-0023 (introduced as Senate Bill 42), the Budget Implementation Act, or BIMP, passed on July 6, 2017, and include two primary elements. First, the BIMP creates a new Tier 3 level of benefits for public sector workers.

Released September 27, 2017

Illinois' fiscal year 2018 budget introduced major changes to the state's public pension systems in an attempt to grapple with Illinois' roughly $130 billion in unfunded liabilities. One of the most important aspects of these changes was a new package of benefits.

Released June 23, 2017

Every school district in Illinois except for the Chicago Public Schools has its teacher pension payments made by the state as a consolidated payment to the Teachers Retirement System.

Released January 21, 2016

Ever want to know what the average pension is for a state employee? What’s a funding ratio, and what are the funding ratios for the different pension funds? How much did benefit increases cost the pension systems?