State legislators are locked in last minute negotiations to reform the impoverished pension system before the end of the legislative session.
(January 7, 2013) – Full funding should not be the goal of an overhaul of Illinois’ public retirement system, which is one of the worst funded in the United States.
“One-hundred-percent funding is impossible,” state Senator Pam Althoff told Fox. “As much as anyone would like to fully fund the pension systems, it is just not practical and impossible to implement.”
Illinois Governor Pat Quinn has made pension reform lawmakers’ highest priority as they enter the final stretch of a lame-duck legislative session. A report from the state’s Auditor General, released on January 31, 2012, recommends that based on “generally accepted actuarial standards, the funding method [for Illinois’ pensions] should be based as a minimum on achieving 100% funding within 30 years.”
Actuaries for two of the state’s five retirement funds have specifically advised the pension boards to calculate contributions based on a goal of full funding.
But the auditor’s recommendations—which are not legally binding—simply aren't feasible, Althoff said. “We have less and less money and more and more demands to spend what little we have left.”
Key lawmakers have been in negotiations during the weekend for deal to put to vote by the January 9 deadline set by Governor Quinn. By most accounts, the reforms under consideration would be closer to Althoff’s ambitions than the auditor general’s.
Illinois faces a $96 billion shortfall, according to the governor, and the state’s unfunded liability rises $17 million every day.
The news is not all bad for the state's pensions, however. In early December, Kentucky pushed Illinois into to second place for the lowest-funded status in the nation, at 24.5%.