CHICAGO, Nov 21 (Reuters) - Illinois’ unfunded public pension liability jumped to $96.8 billion at the end of fiscal 2012, up from $83 billion in fiscal 2011, a state legislative agency reported on Wednesday, as the state’s funded ratio fell further below levels considered healthy.
The Commission on Government Forecasting and Accountability attributed the “significant spike” to investment losses by the five state pension funds, insufficient contributions by the state and a decision by the largest fund - Teachers’ Retirement System (TRS) - to reduce its long-term assumed investment rate of return to 8 percent from 8.5 percent.
Illinois’ funded ratio for pensions, already the lowest among states, fell to 39 percent when fiscal 2012 ended on June 30 from 43.3 percent, the commission reported. A funded level of 80 percent is considered healthy.
The biggest factor contributing to unfunded liabilities from fiscal 1996 to 2012 has been employer contributions, followed by investment returns, while benefit increases had a smaller impact, according to the report.
The state has skipped or skimped on pension payments over the years, while also turning to the sale of pension bonds to raise money for the payments.
Efforts in the Democrat-controlled Legislature to wring cost-savings from pension reforms stumbled in May over a plan to shift the state’s payments to TRS, which accounts for $53.5 billion of the unfunded liability, onto local school districts. A subsequent special legislative session in August to pass reforms ended in failure, triggering a downgrade of Illinois’ credit rating by Standard & Poor’s Ratings Services.
Governor Pat Quinn on Sunday launched a public awareness campaign featuring a cartoon called Squeezy, the pension python. The Democratic governor has repeatedly warned that pension payments, which total over $5 billion in the current fiscal year, would squeeze out funding for core services such as education, health and public safety unless the state enacts reforms.