This is my second column for the Illinois Policy Institute, where I am now a senior fellow.
The article was written well ahead of the Moody's downgrade of Chicago pensions last Friday, with a final edit made on Friday, and posted then on the IPI website.
Illinois Pension Plans 39% Funded
A “Special Pension Briefing” last November, shows the Illinois State retirement Systems are in dismal shape.
Unfunded Liabilities
The above numbers show actuarial (smoothed) asset valuations, as does the following chart.
Summary of Liabilities and Unfunded Ratios
Congratulations go to the Illinois General Assembly Retirement System (GARS) for having one of the worst, (if not the worst) pension plan in the entire nation. It is 16% funded.
No doubt, that increases the pressure of the General Assembly to put the burden of bailing out the system on the backs of Illinois taxpayers.
Smoothed Returns
The above chart shows “smoothed returns” that even out the 2007-2009 dip as well as the 2010-2014 blast higher. Illinois resorted to using “smoothed returns” minimize the effect of the 2007-2009 dip. But now, with the rally, Illinois wants to use actual market returns.
On a non-smoothed (market) basis the numbers are slightly better. Non-smoothed, the total deficit is $105 billion instead of $111 billion.
Liabilities Per Household
Let's be generous and assume the lower $105 billion number. The US Census Bureau shows there are 4,772,723 Illinois households.
The potential taxpayer burden to make up the deficit is $22,000 per household. That's not even the worst of it as the following chart shows.
Liability Trends – Not Smoothed
