by Ted Dabrowski, Kyle Woodruff, Justin Hegy
Illinois Policy Institute
February 25, 2014
National attention is focused on Chicago and Illinois’ collapsing pension systems. The state’s official unfunded pension liability is $100 billion, and the city of Chicago and its sister governments’ shortfall totals another $30 billion. But there is a broader pension crisis looming. Local governments are also increasing taxes and cutting core services to keep their municipal pension funds afloat. Yet, despite increasing taxpayer support, in aggregate, these local pension systems’ unfunded liabilities grew to more than $12 billion in 2010 from $1 billion in 2000. That means taxpayers are on the hook for bailing out state pensions and their local pension funds. The real reason these pensions are in shambles is the inherently flawed defined benefit design. If real reform is implemented, the end result will be government workers with retirement security, stable local budgets, and taxpayers free from the burden of funding failed pension systems.