Institute for Illinois' Fiscal Sustainability: Pension buyout saved state a fraction of early projections
The pension buyout plan that was supposed to save Illinois $445 million in fiscal 2019 did not come close to achieving its goal, a nonpartisan policy-analysis group recently announced.
Illinois' pension buyout saved only $13 million with the wildly inflated initial estimate rooted in an actuarial review of an entirely different buyout proposal, The Institute for Illinois' Fiscal Sustainability (IIFS) at the Civic Federation said in a July 18 report.
"The shortfall has occurred despite robust participation by members of the State Employees’ Retirement System (SERS), the pension fund that was supposed to account for most of the savings," IIFS said in its report. "The problem stems from the original savings estimate, which was overstated because it was based on a different buyout plan and further inflated due to technical miscalculations, according to SERS officials."
The dramatic shortfall in expected savings is not a surprise, according to the report. Questions were raised "from the beginning" about significant savings projected in the buyout plan, which was not vetted in public hearings or evaluated by pension actuaries before it became part of the state's fiscal 2019 budget, the report said.