In the Jan. 26 Telegraph (“S&P lowers Illinois credit rating”), Sara Burnett of the Associated Press wrote, “Illinois has a $96 billion unfunded liability in its five state-employee pension funds, due to decades of shorting or skipping its pension payments.”
SURS went from 88.2 percent funded (only $247 million short of the 90 percent funding target) at the end of FY 2000, to being only 41.3 percent funded at the end of FY 2012 ($16.2 billion short of the 90 percent funding target).
SURS’s problems are from the last 12 years of overly-generous pensions and the poor economy, not from “decades of shorting and skipping” pension payments.
n The cost of SURS benefits have more than tripled in 12 years, from $601 million (FY 2000) to $1.856 billion (FY 2012). That violates the actuarial assumptions that SURS is built on.
n Because of the poor economy, SURS earned only a 2.9 percent rate of return on investments instead of the assumed 8 percent.
n Taxpayer funding for SURS has more than quadrupled in 12 years, from $241 million (FY 2000) to $1.032 billion (FY 2012). For FY 2013, the state’s required SURS contribution increased to $1.403 billion (nearly six times the required contribution of FY 2000).
n While SURS benefit costs have more than tripled, SURS employee contributions only increased from $221 million in FY 2000 to $312 million in FY 2012 (a 41 percent increase, about the rate of inflation). Who is not paying their fair share?
Illinois made the full required $4.9 billion contribution to the five pension systems, yet the unfunded liability increased by $13.7 billion during FY 2012. Is this what Ms. Burnett calls “shorting” the pension systems? Where could Illinois have come up with another $13.7 billion for pensions in FY 2012 (for example, Illinois spent $13.6 billion on education and higher education)?
Illinois needs pension reform, now.