Illinois Public Pension Disaster

Kristen McQueary reports:

"I wish I had a pension," a co-worker lamented Wednesday over his ham and cheese sandwich.

Maybe so. But if I was a state employee - or county, for that matter - I would be nervous about my retirement benefits. Though I am not a state worker, I still have the jitters about the state's fiscal health and how my tax dollars will be spent during the next dozen years or so. Think: black hole.

A report released this week by the Pew Charitable Trusts, a respected Pennsylvania-based policy institute, describes Illinois' pension liability as among the worst in the nation. The report is significant because it compares the pension health of all 50 states, providing context to the political kaleidescope through which Illinois' pension health often is viewed. Gov. Rod Blagojevich's office will give a sunny perspective of the state system; his opponents' view couldn't be more bleak.

So here is what Pew said:

"Illinois has double the trouble of most states: a severely underfunded pension system and some of the steepest bills in the country for retiree health care benefits. On the pension side, Illinois has one of the poorest-funded systems in the country."

There's more.

"Illinois' precarious finances will be further aggravated by what is likely to be a significant liability for non-pension benefits. Illinois offers substantial retiree health benefits to public sector employees, and while the state has not yet determined the long-term cost of doing so (officials say an actuarial valuation is now in progress), the Civic Committee of the Commercial Club of Chicago has estimated the price tag for state employees at $48 billion."

Allow me to toss a few more numbers at your holiday-buzzed brain. Illinois will owe about $103 billion to its pension system in the near future. Only $62 billion has been set aside to cover that cost, underfunding the system by $41 billion. In fiscal year 2006, Illinois funded its pension system at 60 percent, compared with a 50-state mean of 82 percent.

Our highest funding level during the past 10 years was 75 percent in the year 2000. Our lowest was 49 percent in 2003. And the fine print shows state budget officials use a 40-year amortization period, presumably to give our pension funds a rosier glow, even though that practice does not conform with general accounting standards.

Politicians never think about the long term: only the next election.