The $200 billion Illinois’ public and private sectors got in federal covid bailouts pulled Illinois back from its decades-long, self-inflicted financial decline. Unpaid bills are now mostly repaid, state revenues are up and the state has received multiple credit rating upgrades.
But what the bailouts didn’t do is make a significant dent in the state’s core problems, most notably pensions.
Illinoisans are still on the hook for the same amount of pension debt as before the pandemic – $207 billion in official state and local shortfalls, according to the latest data from the Illinois Department of Insurance’s 2023 Biennial Pension Report. That’s equivalent to over $40,000 in pension debt per household.*
State debts are still at nearly $140 billion, similar to where they’ve been over the past four years. Chicago-area debts have grown to over $48 billion. And Cook County has remained steady at about $8 billion.
Only local funds have experienced a decrease in debts between 2019 and 2022, falling to $11 billion from $17 billion.
Add all those up and Illinoisans are still on the hook for covering the systems’ $207 billion hole. If reforms never happen, that will all come due through future tax hikes.
Funded ratios – the health of the pension funds – have also improved as financial markets have jumped due to the trillions pumped into the economy by the Fed. As Pew described, pension funds benefitted from “once-in-a-generation investment performance” in 2021 that helped boost their assets.
Whether Illinois’ funds can continue those gains is an open question, especially as federal covid dollars dry up.
Wirepoints will cover Illinois’ extreme outlier pension status in more detail in a forthcoming report.
In the meantime, the above numbers show that even strong market returns and billions in federal aid can do little to dent the state’s retirement crisis.
Only real reforms, authorized by a pension amendment, can improve retirement security for public sector workers and ease the burden on Illinois taxpayers.
*Moody’s uses market rates to calculate a larger, more realistic pension burden compared to the government’s rosy estimates. Wirepoints will report on that Moody’s data when it becomes available for 2022.