Broke Illinois Pension System Leaves Every Resident With $11,000 Of Debt

The Illinois state pension system is in a mess. 

For those unfamiliar, here's a quick recap: Illinois (rate just one notch above junk) is drowning under a mountain of debt, unpaid bills and underfunded pension liabilities and it's largest city, Chicago, is suffering from a staggering outbreak of violent crime not seen since gang wars engulfed major cities from LA to New York in the mid-90's, while rising taxes have prompted a mass exodus with the state lost 1 resident every 4.3 minutes in 2017. 

And if you need a refresher, feel free to peruse some of our coverage on Illinois' challenges:

The state's horrendous mismanagement has left each man, woman and child of Illinois with nearly $11,000 in debt. 

“Illinois failure to address its pension crisis has resulted in further deterioration of the state and cities’ financial condition, exorbitantly high borrowing costs, and an inability to address other critical needs at the state and local level,” said Laurence Msall, president of Chicago nonprofit - the Civic Federation, which tracks state and municipal finances. “Time is not your friend when your liabilities are compounding and your revenues are not.”

The funding shortfall across Illinois’s five retirement systems climbed to $137 billion by last June, a jump of about $17.8 billion since 2015, after the government for years failed to make adequate contributions.

That pension deficit — more than four times larger that its debt to general-obligation bondholdersis adding hundreds of millions of dollars in costs to Illinois’s budget each year as the government plows more money in to catch up.

Illinois has been contending with the issue for decades. In 1994, Illinois passed a law that was supposed to ensure that the state had enough assets to cover 90 percent of its liabilities by 2045, though it went on to skip annual payments or fail to contribute enough. At the same time, investment returns were hammered by last decade’s stock-market busts. -Bloomberg

“There hasn’t been any progress made,” Dick Ingram, executive director of the Illinois Teachers’ Retirement System, the state’s largest pension. “It’s a case of the numbers have gotten so big that nobody honestly really knows what to do.”

While the state prepares to shell out $8.5 billion to its five retirement systems in 2019, it's not nearly enough. Despite the 300% funding increase over a decade ago (just $2.8 billion in 2009), underfunded liabilities continue to grow. By 2045, the projected contribution will be $19.6 billion according to a March report described by Bloomberg.

Compounding the problem is 2016 loophole to a 2015 state supreme court ruling which required the state to step up its contribution if the assumed rate of return was lowered. Lawmakers instated so-called "smoothing," which allowed the state to phase in hundreds of millions of dollars instead of contributing the funds all at once. 

Sinkhole action

The longer Illinois avoids addressing its pension crisis, the closer the state gets to having to impose overly burdensome taxes - as well as credit downgrades, suspension of pension payments, and even bond defaults according to Richard Ciccarone, president of Merrit Research Services. 

Everyone wants to find a “silver bullet,” said Illinois Representative Robert Martwick, chair of the personnel and pensions committee. But he’s exploring any way to save money. He’s held hearings on everything from reducing the debt by selling more than $100 billion of pension-obligation bonds to consolidating downstate police and fire pension funds to save money. The state cannot grow its way out of this problem, Martwick said. -Bloomberg

We’re in some really, really difficult financial times here,” Martwick said in a phone interview. “We’re still digging a hole for ourselves.

Rauner supports the so-called “consideration model,” which in part allows state employees to choose lower, delayed cost-of-living adjustments in return for ensuring their future raises count toward pensions. Opponents argue this still violates the ban on lowering benefits. “We need more pressure on the General Assembly,” Rachel Bold, a spokeswoman for Rauner, said in an email.

Lawmakers attempted such a "consideration model" in 2013 - approving cuts to cost-of living adjustments and a higher retirement age for some workers - however the courts unanimously struck down the law, saying it violated the state's constitutional ban on reducing retirement benefits.

“Crisis is not an excuse to abandon the rule of law,” the May 8, 2015 state supreme court decision reads.

Maybe the judges can make defaults illegal too? 


J S Bach RafterManFMJ Wed, 05/16/2018 - 20:54 Permalink

$11,000 of debt per citizen?  Pshaw.

What's the bill of each American for our national debt?  I don't even want to calculate.  But, it's all part of the ranching program for milking the goy of interest on currency created by our kosher banking dairy farmers.

Mooooooooo. 🐄💰🐄💰🐄💰🐄💰🐄💰

In reply to by RafterManFMJ

Heros yogibear Thu, 05/17/2018 - 05:26 Permalink

"Move out of that corrupt liberal state. It's the only way to avoid seizing your assets next."

As Bach said above, the US debt per household makes Chicagoans look like pikers.  The thing is, US people have to go through $2450 expatriation, deemed death and exit taxes, 5 years of certified compliance and more to escape.  This all requires citizenship in another country.

If ZOG goes down, she's taking her goyim slaves with her.

In reply to by yogibear

Baron von Bud Kidbuck Wed, 05/16/2018 - 21:08 Permalink

That's right "Kid". Can't be paid. It's perfectly obvious what will happen. In 2016 the entire state would have been bailed out but by another name. With Trump, he thinks people should suffer for their acts of bad faith. A big chance to screw the Ds and make an example of Illinois. Then the gaze will turn to CA. Great angle going into the congressional elections. After the election they both get bailed out.

In reply to by Kidbuck

ChanceIs Juggernaut x2 Wed, 05/16/2018 - 21:48 Permalink

Since the '70s!?!?!

How about 3 of 4 voters casting ballots twice for JFK in 1960.



Graham Nash

So your brother's bound and gagged and they've chained him to a chair
Won't you please come to Chicago just to sing
In a land that's known as freedom how can such a thing be fair
Won't you please come to Chicago for the help that we can bring

We can change the world
Rearrange the world
It's dying
To get better

Politicians sit yourselves down there's nothing for you here
Won't you please come to Chicago for a ride
Don't ask Jack to help you 'cause he'll turn the other ear
Won't you please come to Chicago or else join the other side

We can change the world
Rearrange the world
It's dying
If you believe in justice
If you believe in freedom
Let a man live his own life
Rules and regulations who needs them
Open up the door

Somehow people must be free I hope the day comes soon
Won't you please come to Chicago show your face
From the bottom of the ocean to the mountains of the moon
Won't you please come to Chicago no one else can take your place

We can change the world
Rearrange the world
It's dying
If you believe in justice
If you believe in freedom
Let a man live his own life
Rules and regulations who needs them.



In reply to by Juggernaut x2

nmewn Wed, 05/16/2018 - 20:37 Permalink


Thats right citizens of Illinois, it's not like it's China where you have to apply for a "permit" to move.

Just go to Indiana, it's like, a day trip ;-)

NoDebt Wed, 05/16/2018 - 20:39 Permalink

"The state's horrendous mismanagement has left each man, woman and child of Illinois with nearly $11,000 in debt."

Even if you could pay them that money under the condition that that will be the end of it and it will never happen again...... it would happen again and far quicker than it took the first time.