CHICAGO Nov 4 Illinois's state legislature is
unlikely to vote on a long-awaited pension reform in its current
session that ends this week but could do so before the next one
starts in January, spokespersons for legislative leaders said on
A $100 billion unfunded pension liability is squeezing out
funding for core state services and has been a major reason
behind credit downgrades that have left Illinois with the lowest
ratings among U.S. states.
Some forward progress is reported in efforts to tackle the
pension problem, with new reform proposals being sent late last
week to pension system actuaries for analysis, according to
Steve Brown, spokesman for House Speaker Michael Madigan.
He added that a vote could come before January if a reform
plan can be agreed upon.
"The speaker said once there is an agreement he's prepared
to reconvene (the legislature) at any time," Brown said.
The actuarial analysis of new proposals concerning
cost-of-living adjustments is expected to take a couple of weeks
to complete, said Rikeesha Phelon, a spokeswoman for Senate
President John Cullerton.
A 10-member bipartisan panel of state lawmakers has been
concentrating on changes to the current 3 percent compounded
cost-of-living adjustments for retirees, including limiting the
adjustments to half the inflation rate.
The Democrat-controlled legislature's last official session
of the year is scheduled to start on Tuesday and end on
A plan being considered by a special legislative panel
created in June to thrash out pension changes has put forward a
plan projected to save the state $138 billion over 30 years.
Legislative leaders are seeking alternatives that would increase
the savings to at least a reported $150 billion.
Moody's Investors Service said on Monday a continued delay
means pension reforms might not be in place when Illinois begins
fiscal 2015 on July 1.
The credit rating agency also noted in a report that
preliminary fiscal 2013 data from Illinois' five retirement
systems indicated a $16.6 billion or 9 percent drop in their
adjusted net pension liability using Moody's pension
Moody's estimate of the net liability fell to $173 billion
in the fiscal year that ended June 30 from $189.6 billion in
fiscal 2012 due to investment returns of 12.9 percent on an
asset-weighted basis and higher interest rates, the rating
agency reported. In fiscal 2012, investment returns by the funds
for state workers, legislators, judges, public school teachers,
and higher education workers ranged from 0.6 percent to
minus-0.1 percent, according to a state legislative commission.
"Still, inaction on benefits reforms more than outweighs the
modest (adjusted net pension liability) decline and leaves
severe pension deficits as the main credit pressure for
Illinois, the lowest-rated U.S. state," Moody's said.