The State of Illinois’ new pension law is expected to reduce statutorily required State contributions by $144.9 million over 30 years and lower its unfunded pension liability by about $24 billion, according to actuarial reports from the largest retirement systems. An analysis of the actuarial reports can be found in a document issued on January 24, 2014 in connection with the State’s planned sale of General Obligation bonds in February. The reports provide the first formal assessment of the…
The Civic Federation's legislative priorities for 2014 include public employee pension and retiree healthcare reforms, requiring the State of Illinois to develop and implement a capital improvement plan, establishing a consensus revenue forecast for the State of Illinois, creating a new governing board for the Cook County Forest Preserve District, requiring all counties to hold budget hearings, extending the property tax extension limitation law statewide…
The State of Illinois hopes to receive approximately $3.25 billion in new federal Medicaid funding under a proposal to be submitted to the federal government in March. The estimated amount of new federal funding in the State’s comprehensive waiver proposal was discussed at a General Assembly hearing in Chicago on January 22. Consultants testified that the new funding would be based on State costs of $650 million a year that are not currently reimbursed by the federal government but that would…
Although the most significant change in Illinois’ new pension law consists of a reduction in annual benefit increases paid to current and future retirees, the legislation also requires the State to commit additional funding to the retirement systems through a series of supplemental payments that could total more than $40 billion. The additional funding is intended to go above and beyond the State’s annual contributions, which are now required to be calculated using more generally accepted…
Despite savings from recently enacted pension reforms, the State of Illinois’ finances could still worsen considerably after income tax increases are partially phased out as scheduled beginning in 2015, according to a report by Governor Pat Quinn’s office. The three-year general operating budget projection by the Governor’s Office of Management and Budget (GOMB) and an accompanying economic and fiscal policy report show the State’s operating deficit increasing from $1.9 billion in FY2015 to $4…
States inevitably face lawsuits when they attempt to ease budgetary pressures by cutting pension payments to current employees and retirees. While the legal battle over Illinois’ new pension law has just begun, courts have already issued rulings on similar pension changes in other states. Like Illinois, other states have enacted pension laws that rely on savings from reductions in annual benefit increases. Court decisions on whether states have the ability to reduce these cost-of-living…
The following posts were among the most highly read on the Institute for Illinois’ Fiscal Sustainability’s blog in 2013 and represent some of the most closely followed Illinois fiscal issues this year: Analysis of Pension Reform Proposal Shows Significant State Savings January 3, 2013 This blog examines a pension reform proposal introduced in the Illinois General Assembly late in 2012 by a bipartisan group of legislators. Actuarial reports showed that the proposal could immediately reduce…
On December 18, 2013, the Illinois General Assembly held its first hearing on the plan to apply for a federal waiver to overhaul the State’s Medicaid program. State officials plan to submit an application to the federal government by the middle of February 2014. A draft of the proposal—scheduled to be posted for comment on January 5—is likely to be delayed because of continuing work on the financial aspects of the plan, according to testimony at the joint hearing in Chicago of two House…
The pension plan enacted by the State of Illinois on December 5, 2013 may preserve more of the benefit increases for current employees than is widely assumed, due to a provision of the new law that ties benefit growth to inflation. As discussed here, the new benefit increase is based on years of service and a multiplier that starts at $1,000 for a retiree not covered by Social Security ($800 for a retiree covered by Social Security). The multiplier rises each year by the increase in the…
After decades of dire warnings and several years of legislative negotiations, the Illinois General Assembly on December 3, 2013 passed comprehensive pension reform legislation and Governor Pat Quinn signed it into law on December 5. The legislation is designed to scale back the State’s massive pension obligations while preserving its retirement systems. Supporters estimate that the plan will result in an immediate reduction of more than $20 billion, or approximately 20%, in the State’s total…
