Eye On Illinois: Pension puzzle always something of a moving target

Pensions.

The word alone sends metaphorical shivers up the spine of any Statehouse observer. But how to fund public workers’ retirement presents a useful microcosm for understanding overall the challenges of governing a state.

There are the pessimists, for whom nothing will ever be good enough. There are optimists, who view any sign of progress as validation. In the middle are the pragmatists, who realize the truth is neither as bad nor as good as the others might insist but struggle to win hearts and minds because “could be better, could be worse” rarely lights inspirational fires.

Hanging over everything are both constitutional protections limiting reform efforts and the requirement that all public pension systems must be 90% funded by 2045. The General Assembly enacted that clause in the waning years of the 20th century. Although almost no one currently serving in any branch of government influenced the decision, it remains the law until, well, it isn’t.

Gov. JB Pritzker almost certainly won’t still be in the same office 11 years hence, but he has nevertheless committed hundreds of millions of dollars to pension obligations during his first few years, aside from the minimums, an effort that has yielded improvements in how analysts view the state’s economy and budgetary outlook. But at the end of fiscal 2022, the combined unfunded liability of the five state-funded systems approached $140 billion, a staggering figure.

But there are pension systems outside the state’s big five: one for Cook County workers, another for most municipal employees and school staff who aren’t certified faculty, and the recently consolidated “police” and “fire” categories, made up of what used to be hundreds of individual, local funds for law officers and firefighters. Some of those are doing quite well: the Illinois Municipal Retirement Fund is more than 98% funded, according to a recent Daily Herald report, with the other three groups all doing better than the state’s five funds.

This is all before trying to explain that “unfunded pension liability” is a term of actuarial art. No one definitively knows how much additional money the pension funds will need to pay out the promised benefits. How will investments perform? How long will retirees live? How long will current workers stay in their jobs? How will state staffing requirements change?

The inability to deliver conclusive answers doesn’t excuse the government from trying to meet obligations, but even highly informed estimates can only provide so much guidance. There will always be some element of wait and see, but at least we’ve stopped pretending the problem doesn’t exist.

Ignoring the future to solve present problems isn’t sustainable. Pensions are a big piece of a complex puzzle that will never be completed.

• Scott T. Holland writes about state government issues for Shaw Media. Follow him on Twitter @sth749. He can be reached at sholland@shawmedia.com.