How big is Illinois’ unfunded pension liability?
(By the way, the stuff on top represents all the State’s General Fund expenses for fiscal year 2012.)
$83 billion—that’s the amount the State of Illinois owes to its retirement systems for benefits already earned by public workers and retirees.  Sounds like a lot of money, but is it? How does it stack up to State spending this fiscal year on stuff like education, healthcare, and public safety, for instance?
All in all, the total amount the State owes to its retirement systems is about 2.5 times more than all its expenses from the General Fund in fiscal year 2012. The General Fund is the technical term for the operating and administrative expenses of the State. It’s where money for services like education, healthcare, and public safety comes from, and it’s also where money for the State’s pension payments comes from.
How much the State spent on any of its General Fund services this fiscal year pales in comparison to the unfunded pension liability in Illinois, which is:
- 9 times more than Illinois’ annual investment in education
- 12 times more than Illinois’ annual investment in human services or healthcare
- 54 times more than Illinois’ annual investment in public safety
- Many hundreds times more than Illinois’ annual investment in economic development
- Over 1,000 times more than Illinois’ annual investment in quality of life
|Agency expenditures||In millions|
|Economic development||$ 94|
|Public safety||$ 1,531|
|Human services||$ 6,873|
|Quality of life||$ 68|
|Government services||$ 1,104|
|Unspent appropriations||$ (904)|
|Pension contributions||$ 4,135|
|Statutory transfers out||$ 2,366|
|Capital bond debt service||$ 563|
|Pension bond debt service||$ 1,605|
|Interfund borrowing repayment||$ 626|
|Total Expenditures||$ 33,646|
To clarify a few of the categories of spending:
Unspent appropriations—Also known as “salvage,” this is money appropriated to agencies that ends up being more than their actual expenses, or money that is reserved at the discretion of the governor.
Statutory transfers out—As the Center for Tax and Budget Accountability explains, these are “funds that, pursuant to state legislation, must be paid from the General Fund to other state funds, to local governments, and to cover other state obligations created by statute.”  For example, the State is required to pay part of the income tax revenue it receives to the Local Government Distributive Fund. This expenditure falls under the “statutory transfers out” category.
Capital and pension bond debt service—Debt service is how much money is owed on a loan, including both the principal amount and interest. In the case of capital bonds, it’s debt related to the construction or improvement of things like bridges, roads, and schools. In the case of pensions, it’s debt that a state issued to pay down a deficit in its pension system. Illinois issued pension debt, or “pension obligation bonds,” in 2003 and 2010.
Interfund borrowing repayment—In Illinois, there are more than 600 Special Funds that operate outside of the General Fund—everything from the Personal Property Tax Replacement Fund to the Hearing Instrument Dispenser Examining and Disciplinary Fund. Last fiscal year, as the Civic Federation explains, “The State authorized borrowing up to nearly $1 billion from the Special Funds to help close the State’s budget gap and relieve cash flow pressures. Under the interfund borrowing law, loans from these funds must be paid back within 18 months.”