March 27, 2014 By: Mark Glennon
Still think the pension reform bill passed last year was “comprehensive,” as the press and Governor Quinn called it? Based on the state’s official numbers that it released yesterday, buried behind all the other budget and tax news from the state, at least 80% of the unfunded pension liability was kicked down the road.
Specifically, Illinois released its actuary’s official scoring of last year’s pension bill, linked here. It includes the expected unfunded liability for the three largest of the state’s five pension funds for this June 30, after giving effect to the bill, and assuming it’s upheld by the courts. They total about $78.2 billion. There are two other pensions not covered in the report — one for the judges, which was not addressed by the bill and one for legislators. They are small, totaling about $2 billion in unfunded liabilities, so the grand total hole for the five state funds is about $80 billion.
Recall that the total before the pension bill was roughly $100 billion, so the “comprehensive” bill lowered the unfunded liability by only about 20%.
Also remember that these are the state’s numbers, which are based on assumptions that financial economists unanimously say are bunk. Moody’s, the ratings service, has been saying the true unfunded liabilities are roughly 1.5 to 2 times greater than the official numbers.
The bill’s supporters have spun it by focusing on how much less taxpayers have to contribute over the next 30 years. That’s nice, but a distraction, because it all comes down to how much is owed to current employees that they’ve already earned, for which we’ve set aside nothing. That’s the unfunded liability — $80 billion — that we still have to pay. Shame on Quinn, other bill supporters and most of the media for suggesting anything close to ‘problem solved’ on our state pensions.