Without pension reform, Illinois' pension costs could grow by $1 billion in the next year alone, said Illinois Gov. Bruce Rauner in his budget address Wednesday.
In the speech before a joint session of Illinois' General Assembly, Mr. Rauner again threw his support behind Senate President John Cullerton's consideration model that would let certain workers choose to give up some cost-of-living increases or accept limits on how salary raises will affect their benefits. He also supports a new hybrid defined benefit/defined contribution plan for certain state workers.
A bill that adopted Mr. Cullerton's consideration model for workers hired before Jan. 1, 2011, in three of the five state retirement systems and the Chicago Public School Teachers' Pension & Retirement Fund was rejected by in the Illinois Senate on Feb. 8.
Illinois' five state pension systems faced $129.8 billion in total unfunded liabilities and an aggregate funding ratio of 37.6% on a market-value basis as of June 30. The Chicago teachers' pension fund had a funded status of 52.4% on an actuarial basis, as of the same date.
Mr. Rauner added in his budget address that “long-term pension reform needs to maximize savings in all pension systems.”
Illinois has been operating without a full budget since July 1, 2015. A temporary six-month budget was passed by the Illinois Legislature on June 30, but expired Jan. 1.