The Illinois Senate as early as Nov. 16 could again try to pass a bill authorizing the sale of as much as $4.1 billion in pension obligation bonds.
The Illinois Senate on Nov. 4 failed to pass the pension bond bill, which had passed the state House on May 25 and which would finance all the state's required contributions to the five state retirement systems for the current fiscal year, ending June 30, 2011. The total contributions could range from $3.7 billion to $4.1 billion, depending in part on savings from pension benefit changes enacted earlier this year.
The state has not made any of its required contributions since the fiscal year began on July 1, forcing the state retirement systems to sell off their investments, at an annualized rate that amounts to about 10% of their assets, to pay monthly pension benefits.
Earlier this year, the General Assembly failed to pass a budget provision proposed by Gov. Pat Quinn that called for contributing $3.74 billion to the five state retirement systems. Under it, the $33.7 billion Illinois Teachers' Retirement System, Springfield, would receive $2.16 billion; the $12.9 billion Illinois State Universities Retirement System, Champaign, $777 million; and the $10 billion Illinois State Board of Investment, Chicago, $801 million for the three systems it oversees — Illinois State Employees' Retirement System, the Illinois Judges' Retirement System and the Illinois General Assembly Retirement System.
Separately, the state plans to sell $1.46 billion in securitized bonds on Dec. 8 from expected proceeds of a tobacco settlement, the first such sale by the state, according to Kelly Kraft, spokeswoman for the state Office of Management and Budget.
The state expects to receive about $300 million this fiscal year from its share of the 1998 Tobacco Master Settlement Agreement, which required four tobacco companies to make payments of $210 billion over 25 years to 46 states and other governmental entities.
“The (tobacco bond) proceeds would be used to address all bills due” from the state, Ms. Kraft said. “We are looking toward the legislature to pass responsible borrowing for the pension bond.” It is not the intent for any of the tobacco bond proceeds to pay any of the pension contributions, she said.