The Trillion Dollar Gap: Illinois

Underfunded State Retirement Systems and the Roads to Reform

The Trillion Dollar Gap: Illinois

Illinois' management of its long-term pension liability is cause for serious concern and needs to improve how it handles the bill coming due for retiree health care and other benefits.

With only 54 percent of the state's pension liability funded—well below the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts—Illinois ranks last in the country in terms of what it has set aside to fund this bill coming due. The total unfunded pension liability—$54.4 billion—is more than three times as large as the payroll for members of the state's pension plans.

The Prairie State has consistently failed to meet the annual actuarially required contribution, paying less than 60 percent of the required amount in each year since 2005. In 2009, Illinois issued $3.5 billion in bonds to pay for its 2010 actuarially required contribution. Meanwhile, the state has set aside less than 1 percent of the total $40 billion required to cover the longterm bill for its retiree health care and other benefits.