SPRINGFIELD, Ill. — Illinois state Rep. Frank Mautino has proposed legislation that would allow the state to sell a new Chicago gambling license and use associated proceeds to help fund state and city pension plans.
But there's a twist: the state would still be on the hook for its planned contributions to the five state systems.
Key wording in House Bill 4939 would specify the state must make minimum contributions to the plans; the gaming proceeds would only supplement the state's normal projected payments, Mr. Mautino said.
Previously, once the state had met its minimum pension contributions, it has diverted excess assets to other programs. Mr. Mautino said his bill is unusual because it obligates the state to make annual contributions — regardless of how much revenue is generated — until the pension funds are at least 90% funded.
Becky Carroll, spokeswoman for the governor's Office of Management and Budget, said the state's contribution to the five state pension plans totals $1.4 billion for fiscal 2006.
William Atwood, executive director for the $11.1 billion Illinois State Board of Investment, Chicago, which manages assets for the Illinois State Employees Retirement System, the Judges' Retirement System and the General Assembly Retirement System, said the plans would welcome the additional revenue.
"Any source of funding is a good source," Mr. Atwood said. "The critical part of (the proposed bill) is that it encourages lawmakers to find creative solutions to difficult problems."
The state would receive 80% of all revenue generated by both the casino's license sale and gambling-related taxes, while the remaining 20% would go to pension funds sponsored by the city of Chicago, Mr. Mautino said.
Although he is waiting for gaming officials' estimates, Mr. Mautino said the sale of the license could bring in approximately $2.4 billion, but he added reports that gaming taxes could bring in $750 million a year "seem slightly high."
The five state pension systems — Teachers, State Employees, Judges, State Universities and the General Assembly retirement systems with total assets of $59.3 billion — were underfunded by $38.7 billion as of June 30, 2005.
The largest Chicago pension funds — the Municipal Employees, Laborers, Policemen's, Firemen's, and Park Employees annuity and benefit funds, with $13.7 billion in combined assets — were underfunded by roughly $7.4 billion as of the end of 2004, according to a December 2005 report by the Illinois Commission on Government Forecasting and Accountability.