Illinois’ massive unfunded pension liability is well-publicized, but new data show that taxpayers are actually on the hook for billions more in other retirement-related debt as well. Illinois’ total state and local retirement-related debt is $267 billion, according to a new analysis by the Illinois Policy Institute. The total includes state and local pension shortfalls, pension bonds and unfunded health insurance benefits for retired state and local workers.
Researchers at the Institute also found Illinois’ total retirement-related debt is up 31 percent over the last six years.
“If you break down the state’s total retirement debt per household, every family will owe $56,000,” said Ted Dabrowski, vice president of policy at the Illinois Policy Institute. “This means the government is asking the typical Illinois household to spend an entire year’s income on future taxes just to pay off old state and local retirement debts. Think about what that means for a family struggling to find and keep good jobs and pay their property tax bill – and save for their own retirement.”
In 2015, the Illinois Supreme Court struck down a meager attempt to reform pensions, allowing lawmakers an excuse to avoid fixing one of Illinois’ largest cost drivers. But there are many reforms that lawmakers can implement today that comply with the Illinois Constitution. For example, the state can begin an end to Illinois’ pension crisis by immediately enrolling all new state and local workers in a 401(k)-style plan, and providing the option for current workers to enroll in a 401(k)-style plan and leave the pension system. Other reforms include eliminating both pension spiking and the accumulation of unpaid sick leave, which boost pension costs.
Illinois Policy Institute’s “Each Illinois household on the hook for $56K in government-worker retirement debt” can be found online at https://illin.is/retirementdebt
Graphics are available at https://illin.is/debtgraphics