Prior to the release of the Governor’s annual budget recommendation, the Institute for Illinois’ Fiscal Sustainability at the Civic Federation releases an analysis of the State of Illinois’ fiscal condition and proposes a comprehensive five-year plan for achieving long-term fiscal sustainability for the State of Illinois. This plan responds to the dire reality of Illinois’ financial condition with painful, but necessary recommendations. Nearly five years after the official end of the national…
At the end of December, the Illinois Auditor General released the State Actuary’s annual report on the actuarial assumptions and valuations of the State’s five pension funds. In its report, according to State law, the State Actuary must evaluate whether the pension funds’ actuarial assumptions are reasonable. In prior years, the actuary has expressed reservations that three of the funds’ assumed rates of return on investment were too high and recommended that they be lowered. This year, in…
The Civic Federation and IIFS blogs have written extensively about reductions to assumed rates of return on investment by State and some local public pension plans over the last several years. These changes are part of a nationwide trend, influenced partly by the low interest rate environment and by a larger debate over whether pension plans should use a risk-free rate of return to discount liabilities or the expected rate of return on investment, as used by most public pension plans. In…
A drop in Illinois’ income tax rates—and uncertainty about the implementation of pension changes—could cause the State’s backlog of unpaid bills to grow to $9.9 billion by the end of the 2016 budget year, according to a new forecast by Governor Pat Quinn’s office. Along with the decline in income tax revenues, the three-year projection for the State’s general operating budget through FY2018 assumes an increase in expenditures, mainly for pension contributions and for health insurance for…
The following posts were among the most highly read on the Institute for Illinois’ Fiscal Sustainability’s blog in 2014 and represent the most closely followed Illinois fiscal issues of the year: State pension reform and the State budget. States Face Legal Challenges Over Reduced Pension COLAs January 3, 2014 This blog reviews legal challenges to reductions in state pension COLAs in several states, considering the basis of the lawsuit and the state’s level of constitutional pension…
This editorial discusses a lawsuit filed Tuesday against changes to the City of Chicago’s Municipal and Labor pension funds that are scheduled to go into effect January 1. It cites the Civic Federation’s most recent Status of Local Pension Funding analysis, which found that without reforms the Municipal Employees Pension Fund could be insolvent within 15 years.
For anyone who wants to understand the pension crisis facing the State of Illinois, a recent report for the State’s largest pension fund would be a good place to start. The preliminary actuarial valuation report for the Teachers’ Retirement System (TRS) for the fiscal year ended on June 30, 2014 uses relatively plain language and reader-friendly charts to address a complex subject. The report’s new 24-page executive summary describes the pension valuation process and explains how the State’s…
This article examines the possible bond sale and credit rating implications of a November 21 ruling in Sangamon County Circuit Court against Illinois’ pension reform legislation. The pension reform case is being appealed to the Illinois Supreme Court. The Civic Federation said Illinois cannot afford to wait for the Supreme Court’s ruling and must continue to address its fiscal issues in the meantime.
Shortly after a Sangamon County Circuit Court Judge ruled that the pension reform law passed in Illinois almost a year ago violated the State constitution, Attorney General Lisa Madigan announced she will be seeking an immediate appeal of the decision to the State Supreme Court. Judge John W. Belz issued the Circuit Court’s decision on Friday, November 21, 2014, one day after hearing oral arguments on the case. The short ruling concluded that the changes in Public Act 98-0599 to the…
This article follows the passage of Chicago’s FY2015 budget by a 46-4 City Council vote. The Civic Federation supported the budget in its November 3 analysis and said the proposal is a reasonable response to the City’s immediate financial situation. The Federation also warned that long-term financial stability cannot be achieved without further pension reform action from the Illinois General Assembly.
