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 bondholders — is 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