Illinois plans to contribute $3.89 billion to the state’s five retirement systems in fiscal 2011, a $267 million cut from the state’s required contribution, according to Gov. Pat Quinn’s state budget proposal unveiled today.
The reduction in the contribution is the result of the fiscal 2011 share of amortizing the state’s cost saving from pension benefits cuts Mr. Quinn proposes in the budget. The benefit cuts would apply only to newly hired state employees and reduce the pension obligations to the state’s five plans by a total of more than $100 billion through 2045, according to the budget proposal.
A breakout was unavailable for the proposed contributions for fiscal 2011, which begins July 1, to the five state systems: the $32 billion Illinois Teachers’ Retirement System, Springfield; $12.56 billion Illinois State Universities Retirement System, Champaign; and the three systems whose combined $9.4 billion in assets are overseen by the Illinois State Board of Investment, Chicago. Those systems are the Illinois State Employees’ Retirement System, the Illinois Judges’ Retirement System and the Illinois General Assembly Retirement System.
For fiscal 2010, the state contributed a total of $3.466 billion to the five systems, all financed by pension obligations notes issued in January.
The five systems had $77.8 billion in aggregate unfunded liabilities and had a combined 38.5% funded ratio as of last June 30, according to the proposed budget.
Mr. Quinn plans to ask the Illinois General Assembly to enact his proposed pension benefit cuts this year.
“Benefits must be affordable to the state’s citizens both now and in the future,” the budget proposal states.
“Without bold reform, the system will fall apart, forever disrupting thousands of lives,” Mr. Quinn said in his budget address to the General Assembly today. “Stabilizing the system so that existing employees and retirees will keep their current benefits, while new hires become part of a streamlined pension system, will save approximately $300 million in the first year.”
“Funding the accrued pension liability of the five state retirement systems is Illinois government’s single greatest financial challenge,” the budget proposal states.