Moody's Investors Service estimates the state of Illinois and its local governments' adjusted net pension liability is $241 billion due to the economic downturn resulting from the COVID-19 pandemic, according to a report issued Monday.
That is more than $100 billion over the state's previously reported number for its five pension funds, which was already had worst liabilities among U.S. state pension plans with $137.3 billion as of June 30, according to actuarial valuations.
The state's total required contribution to the five pension funds in fiscal year 2021 is $9.7 billion, according to the funds' most recent actuarial valuation.
The increase in liabilities, despite the state making larger contributions, means pension-related credit risks are higher than during the financial crisis of 2007-2009, the report says, due to expected tax revenue declines. The liabilities exceed expected revenues by 505%, the report says.
In April, Moody's downgraded Illinois' credit outlook to negative from stable in part because investment losses as a result of the current market environment will likely make the state's dire pension funding situation even worse, the ratings agency said at the time. The state has a Baa3 rating with Moody's, its lowest investment-grade rating.
