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* Hannah Meisel at the Daily Line…
Illinois will need to contribute $9.8 billion to its five state pension systems during the 2021 fiscal year, according to new actuarial estimates published last week, representing a $538 million increase in pension costs from what the state is paying to the five systems in the 2020 fiscal year.
The total amount of pension costs included in the current fiscal year’s budget is $9.2 billion — which represents 22 percent of the total amount of state spending in the current $40.7 billion budget. The Governor’s Office of Management and Budget estimates the state budget for the 2021 fiscal year will grow to $42.2 billion, and the estimated $9.8 billion in pension contribution costs for the state’s five pension systems would represent 23 percent of the state’s operating budget.
When debt service payments for past pension bonds — including pension funding bonds from the 2003, 2011 and 2020 fiscal years — are included, along with the state’s contribution to Chicago Teachers’ Pension Fund normal costs, the total amount of pension costs the state expends represents over a quarter of the state’s overall operating budget. Illinois is projected to spend $708 million in debt service for its pension bonds in the 2020 fiscal year.
* The breakout…
General Assembly Retirement System: $27.3 million
Judges’ Retirement System: $148.6 million
State Employees’ Retirement System: $2.5 billion
State Universities Retirement System: $1.99 billion
Teachers’ Retirement System:Based on Illinois statute: $5.1 billion
Based on TRS Board Actuarial Funding Policy: $8.3 billion
GOMB’s latest five-year forecast projected state pension fund spending would rise by $498 million next fiscal year, about $40 million below what will actually be required. GOMB has projected a General Funds deficit of $1.768 billion next fiscal year.
posted by Rich Miller
Tuesday, Nov 5, 19 @ 10:36 am
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How can an Illinois statute that underfunds TRS by 3.1 billion annually be constitutional if Illinois has a constitutionally required balanced budget?
GOMB has projected a General Funds deficit of $1.768 billion next fiscal year?
Comment by Lucky Pierre Tuesday, Nov 5, 19 @ 10:44 am
If you take the $2 billion in pension payments and divide by the 768,000 students enrolled in college in Illinois that’s $2,604 for each student that needs to be paid into the retirement system. And I think that enrollment figure includes private universities and junior colleges.
Comment by Hoping For Retirement Tuesday, Nov 5, 19 @ 10:50 am
We need the revenue from a graduated income tax, as we can see again. The joy ride has to end the top end of the income scale, that has been taxed relatively low for decades.
Comment by Grandson of Man Tuesday, Nov 5, 19 @ 10:51 am
About an 8% error by GOMB. A bit wider than they usually do, but shouldn’t be a budget or cash flow killer, just a bit of tightening here and there.
Comment by RNUG Tuesday, Nov 5, 19 @ 10:55 am
- Grandson of Man -
There’s no joy ride. The upper 20% of income tax earners in Illinois are paying an outsized portion of the budget because they make more money.
Comment by Steve Tuesday, Nov 5, 19 @ 11:00 am
So LP supports raising taxes today by 1% to cover what is owed to the pension systems today, plus more next year. Who knew?
And Steve, that old trope dissolves when considering that the Feds use a progressive tax system.
Comment by Jibba Tuesday, Nov 5, 19 @ 11:07 am
-Steve-
You’re looking at overall dollars instead of percent of income. The wealthy are paying less than the rest of us on a percentage basis, especially with the property taxes in Illinois.
https://www.cbsnews.com/news/americas-richest-400-families-pay-a-lower-tax-rate-than-the-middle-class/
Comment by Travel Guy Tuesday, Nov 5, 19 @ 11:07 am
=== The upper 20% of income tax earners in Illinois are paying an outsized portion of the budget because they make more money.===
97% of the income tax payers will not see a raise in their income taxes.
=== How can an Illinois statute that underfunds TRS by 3.1 billion annually be constitutional if Illinois has a constitutionally required balanced budget?===
You might need a court to decide that.
We already found out how Illinois did without any budget. It didn’t go well.
Comment by Oswego Willy Tuesday, Nov 5, 19 @ 11:14 am
Grandson - the state needs to tighten its spending. The joyride that needs to be over is the massive corruption, lack of spending discipline, and ignored inefficiency that is rampant in state government. As a state employee I see examples every day. I doubt it is limited to my small corner of the state. Get things ship shape and then talk to me about the need for more revenue.
Comment by Captain Obvious Tuesday, Nov 5, 19 @ 11:16 am
=== the state needs to tighten its spending. The joyride that needs to be over is the massive corruption, lack of spending discipline, and ignored inefficiency that is rampant in state government.===
Narrator: IPI measured those things as 0.14% of the state budget.
=== As a state employee I see examples every day. I doubt it is limited to my small corner of the state. Get things ship shape and then talk to me about the need for more revenue.===
You should report then. Why haven’t you?
Comment by Oswego Willy Tuesday, Nov 5, 19 @ 11:20 am
this is wild, half of the money goes to downstate school districts. The State‘s (cough, i mean chicago’s) $5 B contribution to downstate pensions is equal to 20% of downstate’s GDP
Comment by Merica Tuesday, Nov 5, 19 @ 11:21 am
As a state employee I see examples every day.
Oh yeah, like for IDOR or DCEO. Girrrl please
Try working for DHS where we are so understaffed and overworked it’s insane. Rauner made state agencies husks. We’re still husks because Pritzker hasn’t made the hires except for his BPIA
I truly doubt you work for the state. If you do you’re probably one of the Rauner holdovers. Actually….now that I think of it. That’s Rauner language you were using.
Pritzker people -Look- to quote OW
Personnel are policy
This is exactly the danger of retaining Raunerites in your midst.
Comment by Honeybear Tuesday, Nov 5, 19 @ 11:27 am
==Get things ship shape and then talk to me about the need for more revenue.==
I take it you’ve been contacting the Governor’s office with your reports of corruption, improper spending, and suggested efficiencies?
Comment by Jocko Tuesday, Nov 5, 19 @ 11:28 am
What’s a $538 million increase among friends?
Comment by City Zen Tuesday, Nov 5, 19 @ 11:30 am
Paying off our debt isn’t as cool as a ribbon-cutting or a tax cut, but it’s the the responsible thing to do to leave things better for the next generation. While we’re at it, let’s learn from our past mistakes and avoid dumping the cost of decommissioning nuclear power plants on the next generation as well, per last week’s thread. https://capitolfax.com/2019/10/31/exelon-threatens-to-shutter-four-nuke-plants-if-it-doesnt-get-what-it-wants/#comment-13190004
Comment by Earnest Tuesday, Nov 5, 19 @ 11:31 am
== How can an Illinois statute that underfunds TRS by 3.1 billion annually be constitutional if Illinois has a constitutionally required balanced budget?==
My 2 cents: the courts have repeatedly ruled that borrowing can be use to close deficits and balance the budget, and pension holidays (or ramps) are essentially interfund borrowing (robbing Peter to pay Paul).
Comment by DarkDante Tuesday, Nov 5, 19 @ 11:34 am
Captain Obvious
Before George Ryan’s ERI Program, there were 65 thousand state employees in governor’s agencies. 06/30/2018, it was just under 50 thousand.
Efficiency? In my tenure, the biggest impediment to efficiency was OAG’s relentless insistence on “segregation of functions.” IF one person can do a task start to finish, OAG issues audit findings until it is split between two people, and ideally they’d like a supervisor for those two.
Comment by Anyone Remember Tuesday, Nov 5, 19 @ 11:35 am
he usual blathering about who is not paying enough.
- RNUG - Wednesday, Feb 20, 19 @ 1:01 pm:
Latest available report is 2016.
0-25k - 1.96m returns - $0.56b paid
25k-50k - 1.28m returns - $1.31b paid
50k-100k - 1.33m returns - $2.68b paid
100k-500k - 1.04m returns - $5.47b paid
500k-more : 0.06m returns - $2.96 paid
All numbers rounded.
Source: 2026 Final report PDF format
https://tinyurl.com/y5jpmp7
5.67 million returns
$ 12.98 billion
1% (+550K+) are paying 22.8% of state income taxes
18.3% ($100K+) are paying 85.5%
Of course those who make more pay more. Hardly a shocker! But they are paying and I hope they stay in the state. And I would like to see more of these higher income groups come to Illinois.
Comment by OpentoDiscussion Tuesday, Nov 5, 19 @ 12:15 pm
General Assembly Retirement System: $27.3 million
We should all ( Dem/GOP) have buyers remorse based on current/historical corruption in the IL GA. A Pension is an incentive for folk to stick around and the longer they serve the more they can be tempted to the dark side. Can we be like ND, NE, NH, VT, and WY and lobby lawmakers to
drop the GARS pension.
Comment by Donnie Elgin Tuesday, Nov 5, 19 @ 12:20 pm
=What’s a $538 million increase among friends?=
Exactly buddy.
Comment by JS Mill Tuesday, Nov 5, 19 @ 12:32 pm
== Pension is an incentive for folk to stick around and the longer they serve the more they can be tempted to the dark side.==
Where is your proof? People can get to the dark side in a matter of minutes.
Comment by 17% Solution Tuesday, Nov 5, 19 @ 1:03 pm
@17%
Yes, and some have entered the Dark Side even before they enter.
Nevertheless, time increases the odds.
Comment by OpentoDiscussion Tuesday, Nov 5, 19 @ 1:16 pm
===Where is your proof?===
Not proof per se, but anecdotally I know of more than a few former members who hung around longer than they wanted to (and thus were less motivated to be good legislators) in order to make sure they had their 20 years in, whether directly or through reciprocal systems
Comment by Joe Bidenopolous Tuesday, Nov 5, 19 @ 1:20 pm
Have the State Systems released the FY 19 returns as of 6/30. Was it another year of abysmal returns driving up the additional contributions?
Comment by Sue Tuesday, Nov 5, 19 @ 3:23 pm
=Have the State Systems released the FY 19 returns as of 6/30. Was it another year of abysmal returns driving up the additional contributions?=
It is my understanding that each System exceeded their assumed rate for the 5th time in the last 7 years. Per usual, the largest increase in liability is related to the inadequate statutory contribution rates.
Comment by Davos Tuesday, Nov 5, 19 @ 4:02 pm
==Have the State Systems released the FY 19 returns as of 6/30.==
These are usually released in mid-December, just in time for holiday gift giving.
Comment by City Zen Tuesday, Nov 5, 19 @ 4:33 pm
Davis - the last several years the returns have been abysmal. The issue isn’t beating an artificial low bogey- the real test is how the returns Compare to the universe of similar public plans and on ghat score the Illinois returns have been pretty lousy. I. The mid 1990’s thru 2004 TRS at least used to come in pretty regularly in the top Quintile but with the love affair with so called alternatives ( hedge funds) which for the past 10 years have for the most part had awful returns- TRS has lagged in a big way. As I have routinely said- the State should hire a firm like Blackrock and remove the investment authority from all 5 plans
Comment by Sue Tuesday, Nov 5, 19 @ 5:00 pm
That 3.5 Billion proposed increase is looking smaller and smaller (not to mention its been spent a few times over.) Going to have to dig deeper…
Comment by Looking down the Road Tuesday, Nov 5, 19 @ 5:50 pm
We’ve done cuts, from Medicaid cuts to pension reform to the brutal and purposeful cuts of the last governor’s budget sabotage. What we haven’t done is graduated taxation—long overdue.
Comment by Grandson of Man Tuesday, Nov 5, 19 @ 5:59 pm
It looks to me like a doomsday scenario. Anyone in their right mind knows this issue can be resolved in only one way.
Comment by Blue Dog Dem Tuesday, Nov 5, 19 @ 9:11 pm
Blue Dog - Yep, with a moving van.
Comment by Looking down the Road Tuesday, Nov 5, 19 @ 10:16 pm
== this issue can be resolved in only one way===
Yup. Raise enough revenue to pay those ironclad legal obligations, and work for single payer to reduce health care costs. And wait for the effects of climate change to drive people and industry back where they have access to dry land and wet water.
Comment by JIbba Tuesday, Nov 5, 19 @ 11:00 pm