SPRINGFIELD, Ill. (WAND) — The Illinois pension law requires the state to cover 90% of the estimated pension obligations by June 30, 2045. Yet, the state's five pension plans are severely underfunded by roughly $140 billion. State lawmakers hope to reform the system as soon as possible.

The Center for Tax and Budget Accountability told the Illinois House Personnel & Pensions Committee Wednesday that the legacy of the 1995 pension ramp is a very "backloaded approach" to handling the state's debt service.

"We have a fiscal system that really can't put the money into funding this ramp without either a tax increase, a relatively significant one, and or cutting spending on services, neither or which are sort of the best outcomes for taxpayers," said Ralph Martire, the CTBA's executive director. 

Martire and other financial experts stress that state lawmakers have consistently provided less funding for the required annual pension contributions.

"It's like a kid that's just got out of college and has too much money on their credit cards and now you're paying and the monthly cost is making it hard to find an apartment to live in," said Andrew Bodewes with the Illinois Teacher Retirement System. "That, I think, is probably a better description of what this unfunded liability is doing to you. You feel it in your budgets every year because it is expensive to maintain that debt."

A proposal gaining bipartisan support could require the Comptroller and Treasurer to transfer $500 million from the general revenue fund to the pension unfunded liability reduction fund annually. House Bill 4098 would also make changes to the Tier 2 pension plan for people hired after 2011.

"Any major pension legislation should be easy to understand, explain, and administer, have a thorough legal vetting and actuary analysis prior to passage, provide adequate lead time for implementation, and give us the authority to adopt emergency rules as necessary," said Kristen Houch, legislative affairs director for the State Universities Retirement System. 

Rep. Stephanie Kifowit (D-Aurora) and Rep. Steve Reick (R-Woodstock) believe the state should change the automatic annual increases, age and service requirements for retirement, and limits on the amount of salary for annuity purposes.

The sponsors noted that this historic change could help make additional contributions to retirement plans for lawmakers, state employees, university workers, teachers, and judges.

"For the first time since I've been in the General Assembly, I think there's an actual attempt to be serious about solving what I believe is the major financial problem facing this state," Reick said. "It hangs over us like the sword of Damocles." 

They hope to pass pension reform legislation during veto session this fall. Lawmakers are scheduled to return to the Capitol on October 24.

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