From State Rep. Dan Ugaste:
Report Shows Illinois Government Crisis Worst in U.S.
Illinois has the nation’s worst public pension crisis.
Nationwide analysis from the Equable Institute shows Illinois state pensions remain fiscally unstable and threaten retirees and taxpayers, underscoring the need for reform.
The Equable Institute’s annual report on the state of public pensions nationwide reaffirms that Illinois pensions continue to lag the nation in funding and are in desperate need of reform.
If the state fails to fix its pension issues, the budget will continue to be strained, people will continue leaving the state over high taxes and future pension benefits could be at risk.
Preserving the cost savings of Tier 2 and starting most employees in government to a defined contribution system should be implemented if we are ever to gain ground on these costs.
Comparing pension debt to the state’s gross domestic product helps measure the state’s ability to pay based on the local tax base.
By that measure, Illinois ranks as the nation’s worst: unfunded obligations equal 19.02% of state GDP, up from 18.52% a year ago.
In other words, roughly one-fifth of everything produced in the state would be required just to erase the shortfall.
That’s driving up the burden on taxpayers, whose contributions to state pension systems have grown nearly 20-fold, from $614 million in fiscal year 1996 to $11.2 billion in fiscal year 2025.
The heavy pension bill explains why Illinoisans pay the highest effective property tax rate in the country.
Illinois’ funded ratio, the share of promised benefits already covered by assets, is 50.6%, the second worst in the nation.
The state finished the previous two years in last place, but this year New Jersey slipped below it with a ratio of 50.2%.
Illinois is one of only four states that remains under the 60% threshold many analysts label as seriously troubled. Read more on this report from the Illinois Policy Institute.
