Illinois Gov. Rod R. Blagojevich today proposed reducing contributions to the five state retirement systems by a total of $750 million this year and $55 billion over the next 40 years. The state expects to pay $2.6 billion in the new fiscal year, up from $2.1 billion from the current fiscal year. By 2010, he estimated that the annual contribution would be $4 billion.
As of June 30, the Illinois State Teachers' Retirement System had $31.54 billion in assets; Illinois State Universities Retirement System, $12.58 billion; Illinois State Employees' Retirement System, $9.99 billion; Illinois Judges Retirement System, $534 million; and Illinois General Assembly Retirement System, $83 million, according to other state documents. The systems' unfunded liabilities total $35.09 billion.
The governor said today that the state will reduce benefits or raise the retirement age for new employees, except in some cases for police officers, and it will cap the state's pension obligation related to end-of-career teacher pay raises.
He rejected the idea of moving to a defined contribution system, as Gov. Arnold Schwarzenegger has proposed in California. "I don't think it would be prudent to force state employees and retirees to rely solely on the performance of the market for their retirement benefits," he said.
"Illinois has the largest unfunded pension liability of any state in the nation," Mr. Blagojevich said. "What we owe in pension benefits far outstrips the assets we have to pay for those benefits. As a result, every year we have to dedicate more and more money from the general revenue fund just to cover the cost of our pension contributions."
Separately, the Chicago Public School Teachers' Pension & Retirement Fund will lobby legislators to oppose a bill blocking all state contributions for five years. The state contributed $65 million in the fiscal year ended June 30, 83% of total employer contributions. The state funding requirement is estimated to be similar for the current year.
The bill, introduced in the Illinois General Assembly Feb. 10 by Rep. William B. Black, deputy Republican leader, would cut off state funding for fiscal years 2006, 2007, 2008, 2009, and 2010. It was referred to the House Rules Committee, where Mr. Black is the ranking Republican member. He couldn't be reached for comment.