By: Mark Glennon*
The Illinois Department of Insurance has now released its 2017 Biennial Report on state and local pensions, all 671 of them. It’s the most comprehensive aggregation of pension data the state publishes.
Keep in mind these are the officially reported numbers, so they reflect the pensions’ own assumptions that are subject to heavy criticism as being overly optimistic. Financial economists say real numbers are 2X or 3X worse. Also, the numbers are mostly over a year old, at least, as explained below.
Combined, the unfunded liabilities for the 671 pensions worsened by almost $17 billion from 2015 to 2016.
The aggregate funded ratio dropped to 57.6% in 2016 from 57.4% in 2015.
Some pensions have calendar fiscal years and some do not, so the year-over-year comparisons are somewhat inconsistent. Some numbers are quite old since some pensions have already completed their 2017 fiscal year and those numbers would not be reflected.
Keep in mind when you hear reporters and politicians talk about “balanced budgets” that these losses, in the form of growing unfunded pension liabilities, are not included. The lion’s share of our financial crises, in other words, does not appear in government budget accounting.
It’s safe to assume that the downward trend that has been consistent since 2000 has continued, which would make more current numbers still worse. For example, the City of Chicago now reports that it’s four pensions are only 21% funded in aggregate, but this report shows them roughly 35% funded.
Still, the report is useful and important because it’s the only apples-to-apples report we get on all our pensions.
You can find further specific data on any particular pension in the 908-page report, linked here.
Here is one of the key charts from the report:
–Mark Glennon is founder of Wirepoints. Opinions expressed are his own.