FOR IMMEDIATE RELEASE by Illinois' Governor's Office
August 5, 2012

Quinn Administration Releases Study: Without Pension Reform, Illinois Will Spend More on Pensions than Education by 2016

Property Taxpayers Far More Protected With Comprehensive Pension Reform That Includes Responsibility for School Districts Than Without

CHICAGO – August 5, 2012. Governor Quinn released data today prepared by the Illinois Office of Management & Budget (OMB) that shows without comprehensive pension reform, Illinois will spend more on pensions than education by Fiscal Year 2016. The budget office performed the district-by-district analysis based on current projections to examine the long-term funding challenges of the state if comprehensive pension reform is not enacted. The analysis was released just days after Governor Quinn called a special session dedicated to pension reform on August 17.

"Illinois cannot continue down this path at the expense of our children,” Governor Quinn said. “We must enact comprehensive pension reform that eliminates the unfunded liability to repair our pension system and give the next generation the education they deserve.”

Under current actuarial assumptions, required state pension contributions will rise to over $6 billion in the next few years if no comprehensive pension reform is enacted, which will continue to result in significant cuts to education. According to the analysis, continued cuts to education as a result of fast-rising pension costs will cost downstate and suburban school districts far more than assuming the responsibility to pay for their compensation decisions over time.

For example, if comprehensive pension reform that includes a phased-in normal cost realignment is enacted, downstate and suburban school districts would assume $49 million in new normal pension costs in Fiscal Year 2014. However, if no such reform is adopted, downstate and suburban school districts would instead see their budgets reduced by $152 million, according to current projections.

School districts would be far more protected from a property tax increase with comprehensive pension reform that includes the responsibility to pay for compensation decisions, than they would be without.

Every day that Illinois' pension crisis goes unresolved, the unfunded pension liability grows by $12.6 million. Without comprehensive pension reform, funding for key services such as education will continue to be squeezed out. Governor Quinn has proposed a comprehensive pension reform plan that eliminates the unfunded liability over the next 30 years and includes a phased-in normal cost realignment that would ensure school districts have a stake in the contracts they negotiate.

STATE FUNDING PRESSURE - PENSIONS & EDUCATION (PDF, 318 KB)