Illinois will owe $1 billion more to its pension funds as smaller employee contributions kick in, according to projections released this week by state actuaries.
The 19% increase in obligations, to $5.9 billion from $4.9 billion in fiscal 2012, wasn't anticipated by budget officials when they presented the current plan in February. The higher cost to Illinois' retirement funds — the Teachers' Retirement System of the State of Illinois, Illinois Municipal Retirement Fund, State Universities Retirement System of Illinois and the Illinois State Board of Investment, which collectively hold more than $83 billion in assets — threatens to deepen a budget hole.
The main reason for the increase is the change to the systems, said William Atwood, executive director of the Chicago-based Illinois State Board of Investment. While pension reforms effective in January were designed to reduce long-term obligations, the immediate impact of smaller employee contributions has been to increase the difficulty of adequately funding the pensions by 2045.
“You have to increase the state's contribution” to make up the difference, Mr. Atwood said.
The state has a 45% funded ratio, and state law requires 90% funding by 2045.
Gov. Pat Quinn “is committed to making the full pension payment,” Kelly Kraft, a spokeswoman, said in an e-mail.