The State of Illinois will need to increase contributions to its pension funds by $682.0 million in the next budget year, according to preliminary amounts released by the State’s five retirement systems. Total pension contributions required by State law are estimated at $7.5 billion in the year that ends on June 30, 2016, up from $6.9 billion in FY2015. The steep increase is mainly due to decisions earlier this year by the three largest funds to reduce their assumed investment rates of…
This article discuses an upcoming $550 million contribution to the City of Chicago’s police and fire pension funds. The City’s 2014 Annual Financial Analysis, released July 31, interprets language in the 2011 pension law such that the increased contribution is not payable until 2016. The Civic Federation said this gives the City 16 months to negotiate and pass a pension deal before difficult tax hikes or spending cuts are needed.
This article discusses the City of Chicago’s 2014 Annual Financial Analysis released July 31, which reviews 2014 and includes projections for fiscal years 2015 through 2017. The Civic Federation said the City is making significant progress on managing its finances and reducing the structural deficit, but continued progress is threatened by the failure to address the City’s police and fire pension funding crises.
This column discusses the Civic Federation’s analysis of the FY2015 Chicago Public Schools budget. The Civic Federation could not support the budget because it does nothing to address the District’s fiscal crisis and is balanced only by an accounting maneuver that books more than 12 months of revenue into a single fiscal year.
UPDATE: In addition to the Teachers’ Retirement System (TRS), two other large State of Illinois pension funds have also lowered their assumed rates of return on investment. Both the State Universities Retirement System (SURS) and the State Employees’ Retirement System (SERS) recently reduced their assumed investment rates of return from 7.75% to 7.25%. SURS took the action on June 13, 2014, according to a spokeswoman for the retirement system, while documents show that SERS made the decision…
As part of the FY2015 budget recommendation for the State of Illinois, Governor Pat Quinn provided two separate five-year projections for both “recommended” and “not recommended” budget proposals. The long-term outlooks show the implications of the extension of higher income tax rates in the recommended budget and the considerable spending reductions that would be necessary to balance the State’s budget if the increases were allowed to roll back under the not recommended budget. Under current…
This article discusses Chicago Public Schools’ announcement that an additional $70 million for school-based budgets will be available in FY2015 because the District plans to extend its revenue recognition period to August 29—two months into FY2016. The Civic Federation said this financial maneuver of counting the future year’s revenue toward this year’s budget is risky. The Federation has continually recommended CPS develop a long-term financial plan to stabilize its budget.
As the legal battle over Illinois’ new pension law continues, courts continue to issue rulings on similar pension changes in other states. Last month, Governor Lincoln D. Chafee, General Treasurer Gina M. Raimondo, and the Federal Mediation and Conciliation Board signed off on a settlement agreement to a consolidated lawsuit challenging changes to Rhode Island’s state-administered pension system. If approved by employees, retirees and state legislators, the agreement would make some changes to…
This editorial discusses findings from the Civic Federation’s FY2014 State of Illinois Enacted Budget Analysis. The analysis said the State is not prepared to handle unsustainable pension payments or the loss of revenue from the scheduled partial rollback of the income tax rate increases in January 2015.
To support construction projects during the busy summer months, the State of Illinois issued $2.0 billion of capital purpose debt, which for the most part will be repaid from the State’s Capital Projects Fund. The Fund was created to receive the revenues from a package of new taxes and fees that was passed in FY2010 to fund the $31-billion Illinois Jobs Now! capital program. As previously discussed here, these revenue sources have lagged far behind the original legislative estimates. With the…
