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Thursday, January 23, 2020

Broken pension system throws away $9 billion in potential savings, IPI reports

State Government

By Glenn Minnis | Dec 12, 2019

Pension

An Illinois Policy Institute (IPI) article claims that a healthy pension system would save the state 84 percent of the cost to fund the broken system we have today – a savings of $8.95 billion this year alone, or enough to pay the tuitions of all 122,439 undergraduate students enrolled in Illinois public universities this year, with plenty left over.

“From 1990 to 1998, the state spent less than 4 percent of its General Revenue Fund dollars on pensions,” the article said. “If the pension system had been appropriately managed and designed for sustainability, and as a result the state still spent 4 percent this year, pensions would cost the state $1.61 billion.”

In reality, Illinois now spends more than a quarter of its revenue on pensions and related costs – to the tune of $10.2 billion in 2019. 


With those savings, the state could also cover the costs of a number of government services that have gone neglected in the name of addressing pensions. Spending on core services is down by almost one-third since the turn of the millennium, compared to spending for pensions being up some 500 percent.

Programs aimed at aiding the developmentally disabled are among those that have suffered, along with child immunizations, investigating infant mortality cases and funding the state’s MAP grant program for low-income college students.

Savings could also be seen in the amount of overall tax burdens strapped to the backs of stressed-out Illinoisans, leaving IPI with a harsh bottom-line assessment.

“The way governments spend money reflects their true priorities,” the article said. “In Illinois, politicians prioritize pensions over everything else.”

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