By: Ted Dabrowski and John Klingner
The $200 billion Illinois’ public and private sectors got in federal covid bailouts pulled Illinois back from its decades-long, self-inflicted financial decline. Unpaid bills are now mostly repaid, state revenues are up and the state has received multiple credit rating upgrades.
But what the bailouts didn’t do is make a significant dent in the state’s core problems, most notably pensions.
Illinoisans are still on the hook for the same amount of pension debt as before the pandemic – $207 billion in official state and local shortfalls, according to the latest data from the Illinois Department of Insurance’s 2023 Biennial Pension Report. That’s equivalent to over $40,000 in pension debt per household.*
State debts are still at nearly $140 billion, similar to where they’ve been over the past four years. Chicago-area debts have grown to over $48 billion. And Cook County has remained steady at about $8 billion.
Only local funds have experienced a decrease in debts between 2019 and 2022, falling to $11 billion from $17 billion.
Add all those up and Illinoisans are still on the hook for covering the systems’ $207 billion hole. If reforms never happen, that will all come due through future tax hikes.
Funded ratios – the health of the pension funds – have also improved as financial markets have jumped due to the trillions pumped into the economy by the Fed. As Pew described, pension funds benefitted from “once-in-a-generation investment performance” in 2021 that helped boost their assets.
Whether Illinois’ funds can continue those gains is an open question, especially as federal covid dollars dry up.
Wirepoints will cover Illinois’ extreme outlier pension status in more detail in a forthcoming report.
In the meantime, the above numbers show that even strong market returns and billions in federal aid can do little to dent the state’s retirement crisis.
Only real reforms, authorized by a pension amendment, can improve retirement security for public sector workers and ease the burden on Illinois taxpayers.
*Moody’s uses market rates to calculate a larger, more realistic pension burden compared to the government’s rosy estimates. Wirepoints will report on that Moody’s data when it becomes available for 2022.
Read more from Wirepoints:
- Illinois pension debts jump back up to $140 billion, state shortchanges its annual contribution by $4.4 billion
- Changed assumptions knock $25.1 billion off Illinois’ unfunded healthcare liability
- Johnson’s next headache. Chicago’s pension funds are running out of money
- New report shows cost of fixing Illinois Tier 2 pensions at $280 million annually for 20 years, which is ignored in budget
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
The next issue is whether haircuts should be pro rata or instead sliced off the top of what pension millionaires claim. Also, when payments fall or stop, is there a federal tax benefit for bad debts? Would.love to see PPF’s research and views on these points. And, what are the woke equity and equal protection arguments for how much is owed by the many to so few? Most likely we’ll have to ration the bucks from the dwindling aquifer.
My research shows no cuts for pensioners. More tax increases and less services will be the future. Pay more tax dollars now or pay even more later. Last I saw pensions were paid about 16 billion annually. The state collects over 50 billion each year. Even if the pension funds get near zero, plenty of general revenue to cover the debt just not all the other “wants”. Not to mention, plenty of new taxes that can be collected. No cuts for pension any time in the foreseeable future.
Your research is wrong. Eventually, and likely during the next major recession, a handful suburban and downstate municipalities finances will collapse as tax revenues fail to cover pension obligations. How can a municipality conduct business if there’s no power or lights or email because of pension intercepts. This will only accelerate as the recession continues. Raising taxes is a medium to long term fix as revenue is generated over the course of a year, and it usually takes a while to include the new tax in the forward looking budget, when the real problem is that the pensions need the… Read more »
See Harvey IL for further explanation. That town should be bankrupt by any other standard and yet pensions are paid and bondholders getting pennies on the dollar after getting stiffed for the last 5 years. Drastic cuts to city services. Fire and police gutted.
PPF, it sounds like you’re saying that public pensions trump public safety, public health, public debt and public education. Perhaps your comment is an implied criticism of the logic of venal vote-seeking judges and legislators. If you really believe this, I’d have to go back to the ’50’s and ask “Sir, have you no shame?” (A question that brought down Joe McCarthy.) Understanding that advocacy Is often based on overstatement and half-truths, do you have a cogent philosophical or policy argument that Harvey is how the state should address the underfunding problem? Or is the discussion simply posturing in the… Read more »
Of course Harvey isn’t how the state should be run. The state and municipalities should have set aside enough money to fund pensions in the first place. We’ve known about this underfunding for decades yet the voters continued to elect leaders that kicked the debt down the road. The voters of Illinois have allowed this to happen. Now that the need for higher taxes are needed, many people on this site want to steal from pensioners instead of paying the needed taxes to pay our debts. These thieves are the ones that have no shame. I point out Harvey for… Read more »
We need more taxes to pay our debts as well as cover needed services. People that don’t want higher taxes believe less taxation trumps needed services. FYI, pension debt is also public debt. So not sure how pensions could trump itself.
I think it’s a stretch to equate “contract rights” with “public debt.” Debt ordinarily implies borrowing. I think you weaken your argument by conflating the two. The theory that pensions are “contract rights” appears to give pension obligations priority over other obligations — even obligations to lenders and service-providers. I think you have said or implied that Chicago would have to fire teachers [who are under labor contracts] in order to pay pensions. “People who don’t want higher taxes” probably describes 99+% of people who pay taxes. Some (perhaps you and I both) are persuaded by the “fair share” argument… Read more »
“I’d still welcome your insights on how your expectations (however reasonable) trump my expectations of Social Security and Veterans’ expectations of health care and urban parents’ expectations of schools that educate and citizens’ expectations of public safety.” My expectations are that debts are paid before we spend other money on things that we may want but are not legally required to pay. Pensions are indeed a debt as they are deferred wages that the state agreed to pay at a later date. While it’s not the same as borrowing it is indeed a debt. I do think deferred wages have… Read more »
The “legal debt” analysis is superficially persuasive until I reflect on the increasingly selective enforcement of laws on the books and the cynical modifications of laws that have become “inconvenient” to politicians. There are lots of legal debts and they run in both directions. States and cities defer paying service providers and product suppliers. They don’t attempt to collect taxes or traffic fines. The Biden administration ignores immigration laws. They ignore contract commitments and approve cost overruns. Cities adopt sanctuary city ordinances that remind us of nullification laws that preceded the Civil War. States suspend residential rents without regard to… Read more »
My Illinois long/short trade;
Da Judge!!
I would like to thank you and all like you for giving me the incentive to get out of Illinois forever. I will take with me lots of money spent on economic activities and bring it somewhere else.
You have to be one of the most thankless people in the world. Illinois needs more like you.
Why would I thank you for paying your taxes as required? You’re not special and I pay a ton in taxes myself and you don’t thank me.
Unfortunately you’ve been crying wolf and have no intention of leaving. You’ve been talking about it for years but don’t seem to have any intention of actually pulling the trigger. Just keep paying those taxes while you remain frozen like a deer in headlights. Maybe some day you’ll be able to generate some courage.
Hmm, here’s a thought which should be a progressives wet dream.
Instead of illegals paying coyotes thousands of dollars to help them break into our country the State of Illinois could set up shop at the Caracas Airport.
Here’s the slogan; “$5K direct to the USA!”
The amount above the plane fare can be repurposed to funding public employee pensions.
JB, if you’re in need of managerial advice just get in touch with Mark.
Moving somewhere else is an option but the Biden Administration has taken every opportunity to nationalize these untenable blue state obligations. If we ever were to dissolve the electoral college and go to nationwide presidential popular voting, the overwhelming population of big blue cities would bleed the rural areas dry. There’d be no place to go.
And much of this pension money is being spent out of state to help other states economic systems. Right now, the residents should be felling “Stupid”. Most households cannot afford to pay this amount, which means some others are going to have to carry the weight of this largest generational theft in the history of the world. Remember many of them retired at age 50 and will collect for 35 or more years. These numbers are going to keep growing and growing. Only way out of this mess is to MOVE ASAP.
My motto for Illinois;
Stay and Pay, Leave and Save.
So says the Cockold limp wristed lady boy who’s wife made him move to Colorado
SamIAm,
In the 20 years since I left Taxistan I’ve put approx. $200K in my bank account because of lower taxes.
Also, I’m looking forward to seeing your Dem King Mickey Madigan go to prison next year!!
Da Judge
Hope U asked Santa for more Anal Lube that’s a lot of bending over to make that kinda cash
SamIAmtard,
$200K simpleton. That pays for a lot of nice vacations and new cars.
Glad you like paying stupidly high taxes in Taxistan.
I will send you a nice card when your corrupt Dem King Mikey Madigan is found guilty next year.
Da Judge
Oh boy u have lots of money kinda tough making it acting like The Gimp from Pulp Fiction but hey I guess it works for u Butt Boy. And yet again u show ur intelligence or exactly lack of by telling me where I reside Doofus u have no idea where that is. But I know where u reside and hang out in the Lavender Hill area I hear ur a very popular kinda guy
SamIAmtard,
I’m guessing you live in Berwyn or Cicero in your Mom’s basement.
Is it hard to get the stench out of your clothes after riding around all day on a garbage truck?!
Da Judge
Oh Cabana Boy ur so wrong as usual but what an elitist attitude u think ur better than a garbage man wow u really are a Scum Bag and the time it would take to get the smell out would be the same time it takes to get the Schlong off ur breath
Anywhere but here is the choice. This means any number of states not run by idiots. Politicians are poor for fiscal responsibility, always have been. The new breed of politicians are incompetent in most financial matters. There will be a time when this financial calamity will fall to every man, woman, and child who decided to stay. The cost will be passed down in nearly everything that is purchased inside the state. Businesses will pass this down to consumers. Hopefully this same calamity doesn’t happen federally but I think it’s well on its way.
Plenty of money for plenty of feel good vote buying programs for the Illinois populace including hosting and supporting global immigrants but no money to pay the existing bills. Funny how the unions, notably the teachers and AFSME unions who are involved in this, do not demand immediate funding for their pension funds.
The unions are the main voices demanding funds be spent on “social justice” projects and more money in the union members’ pockets today. They believe they can always collect more later- the pensions will be paid even if they slurp up every dollar. Just ask PPF. Unions have every incentive to demand money be diverted from pension payments to themselves and their ideologies. Brandon Johnson was not elected because unions want to fund pensions. He was elected to siphon off more from the trough. But non-union taxpayers are accused of trying to steal from those paragons of virtue, public union… Read more »
“Unions have every incentive to demand money be diverted from pension payments to themselves and their ideologies.” Another lie told by the antidepressant fiend. Pensioners have sued in the past to demand fully funding pensions yet they were told they have no such rights. If they “have every incentive” then why the lawsuits? “Brandon Johnson was not elected because unions want to fund pensions.” Yet he actuarially funded the pensions with his budget. “But non-union taxpayers are accused of trying to steal from those paragons of virtue, public union employees.” Not all non-union taxpayers but you and others like you… Read more »
Get real PPF. Everyone acknowledges that pensions have been underfunded for years, in order to divert money to other purposes. Wirepoints has documented the dramatic increase in spending on education. The increased spending has done nothing to improve anything about education except the bank accounts of the beneficiaries. The unions explain that nothing can be done about poor results until we “invest” yet more money in social and education programs. Unions front and center for more money now, always. Keep trotting out the “but the pensioners lawsuit” canard. Until the unions start insisting that other programs must be foregone in… Read more »
As usual you ignore the facts. The lawsuits matter because it shows that unions do want pensions funded. Yet you want them to continue to “demand” pensions are funded when the courts told them to pound sand. How many times should they bring the same lawsuit demanding full funding? “Until the unions start insisting that other programs must be foregone in order to bring pensions up to required funding levels, including benefits to themselves, stop blaming others for trying to steal from pensioners.” Why do unions need to do this? They are well within their rights to demand more spending… Read more »
Gosh, how did I know you would come back with “the voters”? Gotta hand it to the architects of this plan. It makes Bernie Madoff look like a piker. 1. Sell parents on the idea that they are investing in their kids future by giving more and more money to education, money that ends up in the pockets of union members. 2. Make sure that all future benefits to said union members are guaranteed, no matter what transpires in the interim. 3. Push for ever bigger investments in the education project, all for the sake of our children’s future of… Read more »
We get it. You don’t want to pay the debt and will whine and complain about it non-stop. Don’t forget to hold your breath and maybe stomp your feet to complete the tantrum. When your tears are dry just remember to keep paying your tax bill. No amount of your ridiculous comparisons to Madoff will get you out of paying the legal debt.
We get it. You can’t justify what’s been done. Shut up and pay, along with some insults, is all you can offer.
No need to justify pensions being paid. It’s the law of the land. That’s like asking your mortgage holder to justify receiving your monthly payment. If you want to keep living there then you need to keep making payments.
Debts by the state will be paid by the state and there is nothing your complaining can do to change that.
Debts incurred by fraud. Can you offer even a small defense of what the teacher unions have done over the last 50 years?
I wonder if Madoff’s lawyers thought of using a “blame the victim” defense. A novel legal theory.
There is no fraud. Just because you say it doesn’t make it so. The teachers have used their constitutional rights to collectively bargain and exchange their labor for a salary and a pension. The state has agreed to these terms. Get over your jealousy of teachers and go earn your own retirement. Their success does not prevent you from becoming successful. You aren’t a victim just some whiny resident that doesn’t like to pay his debts. Retirees will continue to get paid what is legally and contractually theirs. Oh, and in about 6 weeks they will be getting a 3%… Read more »
Oh come on PPF, have some fun with it! You and your crew pulled off the scam of the century! Why so dour and heavy-handed? We miss your discussions of fine wine and steaks. Why not keep rubbing our faces in it? It’s what you always did best.
And make sure to play the IL lottery because, as they told us at its inception in the early ‘70s, all proceeds will benefit the education fund in the state. Remember that one? Well Charlie Brown, another 50 Halloweens have come and gone and the Great School Pumkinheads are still continually crying for more money. But wait til next year…
The pension contributions by the taxpayers and yourself have been funded all these years via taxes mostly paid by all property owners. The problem lies with once you and I pay the required amount where does the money go? On paper it shows the bill due is paid in full every year. All the contracts for school/police/fire have the exact amount due based on the terms of the contract. Every municipality must pay the amount stated in the contracts. Not one penny less. Have you seen any town saying here is half the money and we will pay the rest… Read more »
“The taxpayer did not underfund the pensions-The State did.” The “State” is also funded by the taxpayers. They are one and the same. It’s my understanding that pension contributions come from employee contributions, employer contributions and state contributions. Local taxpayers may have paid the portion for the employer contributions but those same taxpayers aren’t paying enough to cover the states portion. There is no “misappropriation” of funds. However, for arguments sake, lets say there was and the state took the local property taxes and used them for something else besides pensions. That would still mean the state is on the… Read more »
“The “State” is also funded by the taxpayers. They are one and the same. It’s my understanding that pension contributions come from employee contributions, employer contributions and state contributions. Local taxpayers may have paid the portion for the employer contributions but those same taxpayers aren’t paying enough to cover the states portion.”
The taxpayers are on the hook for all. Employer as you state are the taxpayers, State are the taxpayers, employees pay nothing, it is also the taxpayers.
and who knows how many $billions$ Tier II fix (HB4098) will add to the taxpayer debt tab?
Small potatoes compared to the 200 billion already owed. You can’t cheat people by paying them a pension less than social security. Debt must be paid.
I don’t think the debt must be paid is the interesting narrative. The laws and politicians have made it so. What I find interesting is what the 41k per household debt figure means. Most don’t have nearly enough income to make an appreciable dent in the debt. The only group which is capable is the top 10 percent of income earners – just a guess – but consideration of that group alone moves the figure per capital to 300k or even higher. This makes moving to or staying in Illinois a difficult proposition. No one can predict the future, but… Read more »