Pension contributions and debt service comprise 17.4% of Illinois’ $33.6 billion general fund budget in fiscal year 2012, according to a report released Monday by the Institute for Illinois’ Fiscal Sustainability at the Civic Federation.
The state will pay $4.2 billion in pension contributions in fiscal year 2012 and $1.6 billion for debt service on pension obligation bonds. Illinois sold pension obligation bonds worth a combined $7.2 billion in fiscal year 2010 and 2011 to pay its pension contribution expenses, according to the report.
The report notes that in fiscal 2012, which ends June 30, the state will make its required pension contribution for the first time without borrowing since fiscal year 2009.
The general fund is used for the general operations of the Illinois state government.
“The state’s historic underfunding (of its pension plans) is much of the cause of the state’s financial distress,” Laurence Msall, president of the Civic Federation, said in a telephone interview, noting that deficit spending by the state also has played a significant role.
He said the Civic Federation supports a proposal in the Illinois General Assembly to create a three-tiered system that would allow employees to stay in the existing system at a higher cost, pay less for a smaller benefit or join a defined contribution plan.