Obscured in the last three years of budget struggles in the state of Illinois is a remaining massive unfunded liability in state pension systems—$129 billion by some accounts.
Now comes an organization representing state university retirees with legislation that would refinance that debt.
Larry Alferink is president of the State Universities Annuitants Association, which has 16,000 members. He taught at Illinois State University for decades. SUAA has crafted a bill to borrow $109 billion and use the proceeds to fund back contributions to state pension funds. Proceeds from investments, Alferink said, would not only help the pension fund catch up to where it should be, but pay enough interest to retire bonds issued on the borrowing.
Alferink said the state pension systems are about 40 percent funded, about what they were during former Gov. Jim Edgar's administration. Pensions are funded with state worker contributions, contributions from the state, and investment income. By shorting state contributions over many decades, Alferink said, lawmakers have deprived the pension funded of reliable earnings. He also noted state workers do not receive Social Security.
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