Courtesy of Mish.
Earlier today I received an email from Jonathan Ingram at the Illinois Policy Institute that I wish to share. The email is regarding the sorry state of Illinois Pensions.
Dear Mish
Illinois has a long history of fake reforms – legislative proposals that promise to solve the great policy challenges of the day when passed, but never actually accomplish these goals and often make problems worse.
In the mid-1990s, Illinois lawmakers were facing a serious problem: the unfunded liability of the state’s five public pension systems had reached $20 billion.
As a way to combat this growing problem, the state created a repayment schedule, often called the “pension ramp.”
The pension ramp, which was passed by the Republican-controlled General Assembly and signed into law by former Republican Gov. Jim Edgar, promised to reach 90% funding levels by 2045.
According to the repayment schedule, the five systems should be nearly 57% funded today. Instead, the systems are just 39% funded and the state’s pension debt has grown to $95 billion.
What happened?
You’ll often hear that the pension debt was caused by the state “skipping pension payments.” What you won’t hear is that taxpayers have actually paid $8 billion more than the original ramp projected.
How can the five pension systems be just 39% funded?
The systems simply weren’t able to get the kinds of returns they promised and the underlying actuarial assumptions didn’t reflect reality….
