Pensions and Investments
Plan Sponsors Pension contributions absent from Illinois budget
Friday, May 7, 2010
The Illinois Senate on Thursday passed a state budget proposal for fiscal year 2011 that has no money to fund the state’s required $3.74 billion total contribution to the state retirement systems for the fiscal year, starting July 1, according to Rikeesha Phelon, press secretary for Senate Democrats.
The House is debating the proposed budget on Friday.
Ms. Phelon said she doesn’t know how the General Assembly will resolve funding pension contributions. Among proposals, the General Assembly is considering taking a contribution holiday for the entire fiscal year or delaying contributions to the retirement systems until later in the fiscal year that starts July 1, she added.
A proposal to sell bonds to finance the state’s contributions was defeated in the state Senate on Wednesday, she said. Borrowing measures require a 60% majority vote, she said.
A proposal to finance half of the contribution by issuing bonds to the state retirement systems and pay for the rest by selling bonds in the market was also defeated Wednesday, said William R. Atwood, executive director of the $10.4 billion Illinois State Board of Investment, Chicago.
Gov. Pat Quinn “is committed to fully funding the pension systems this fiscal year (starting in July) just as he fully funded the systems for fiscal year 2010, ending June 30, Kelly Kraft, spokeswoman for the state Office of Management and Budget, said in a statement.
For its current fiscal year, ending June 30, Illinois financed its entire state pension contribution by selling $3.466 billion in pension obligation notes last January.
State Sen. Bill Brady, Mr. Quinn’s Republican opponent in the November gubernatorial election, couldn’t be reached for comment.
Steve Brown, press secretary for House Speaker Michael J. Madigan, said the House was considering several alternative proposals on Friday for financing the state’s pension contributions that don’t include selling pension bonds. He declined to elaborate.
Mr. Quinn’s has proposed contributing $3.74 billion to the five retirement systems, if they revise their actuarial annual contributions to reflect some $300 million in pension savings from a benefit-reduction bill enacted earlier this spring, Ms. Kraft said. She couldn’t elaborate on how proposed contributions would be financed.
The $32.1 billion Illinois Teachers’ Retirement System, Springfield, would receive $2.16 billion; the $13.2 billion Illinois State Universities Retirement System, Champaign, $777 million; and the $9.2 billion Illinois State Board of Investment, Chicago, a combined $801 million for the three systems it oversees, according to the state OMB. The ISBI oversees the investments of the Illinois State Employees’ Retirement System, the Illinois Judges’ Retirement System and the Illinois General Assembly Retirement System.
Judith Parker, interim executive director, Illinois SURS, said she believes it would take legislation to have the systems revise their annual actuarial contributions.