If Illinoisans needed a reminder that the state’s public pension systems are deeply in debt, they got it when Moody’s Investor Services released a special report showing the state’s ratio of pension debt to revenues is far and away the worst in the nation.
The Moody’s study shows Illinois pension debt at 250% of its revenues. Only one other state comes remotely close: Connecticut with around 200 percent. The U.S. median is 51.2% and neighboring Wisconsin is at less than 25%, as are New York and Ohio.
Illinois and Connecticut are the only states with ratios above 180%. California, which once tied with Illinois for the worst credit rating in the nation, is well below 80%.
The report was not a downgrade of Illinois’ credit rating, which remains at A3 from Moody’s – still the lowest rating of any state.
The report came as pension reform legislation adopted last year works its way through the courts. The Moody’s study ranks Illinois’ legal framework for altering pension obligations as “very inflexible.” Illinois is one of only seven states that has specific constitutional protections for pension benefits of public employees.
The largest of the state pension systems is the Teacher’s Retirement System, which covers downstate and suburban teachers and administrators and accounts for around 40% of the Adjusted Net Pension Liability. That number does not include Chicago Public Schools. That one school district accounts for around five percent of all Illinois adjusted net pension liabilities.
Moody’s also points out that large local governments like the city of Chicago have historically made contributions below the amounts actuaries recommend.