CHICAGO, Dec 10 (Reuters) - Illinois added another $6.4 billion to its already large unfunded pension liability in fiscal 2015, pushing the total to $111 billion, according to a state legislative report on Thursday.
The bad news on the pension front comes as a budget stalemate between Republican Governor Bruce Rauner and Democrats who control the legislature continues nearly halfway through the fiscal year that began on July 1.
Analysts at the legislature’s Commission on Government Forecasting and Accountability said changes in some actuarial assumptions at two of the five Illinois public employee retirement systems, along with insufficient state contributions, were the main reasons for the higher unfunded liability when fiscal 2015 ended on June 30.
Illinois has the worst-funded pensions among the 50 states and its funded ratio fell to 41.9 percent at the end of fiscal 2015 from 42.9 percent in fiscal 2014, the report said. Those percentages are well below the 80 percent level that is considered healthy.
Moody’s Investors Service and Fitch Ratings in October pushed Illinois’ credit ratings into the low investment grade triple-B level, citing the state’s pension funding problems, the budget impasse, and a growing structural deficit.
A cash crunch resulting from the budget stalemate forced Illinois’ comptroller to delay a $560 million November pension payment. However, stronger revenue this month made a $560 million December payment possible.
The legislative commission’s report projected that the state’s pension contribution will rise to $7.908 billion in fiscal 2017, which begins on July 1, from nearly $7.535 this fiscal year. The report also projected the unfunded liability will grow to $114.8 billion at the end of fiscal 2016 and will keep growing until it tops out at $132.16 billion in fiscal 2029.
Teachers’ Retirement System, the biggest of the five state retirement systems, said on Thursday that Illinois’ $3.986 billion fiscal 2017 contribution falls far short of the $6.07 billion that would be required using actuarial standards.
Reporting by Karen Pierog; Editing by Matthew Lewis