Moody’s Analytics is predicting the state of Illinois is on track to setting a record no state wants to lay claim to.
According to researchers, the state’s baa3.negative outlook will set a record for all 50 states when its adjusted net pension liability (ANPL) jumps above $300 billion this year.
“The new liability is based on the aggregate ANPL of Illinois’ five pension systems, which reached $317 billion as of June 30 last year, a 19% jump from the prior year that was driven largely by falling interest rates,” Moody’s Vice President Ted Hampton said. “The FTSE Pension Liability Index, a high-grade corporate bond index Moody’s uses to value state and local government pension liabilities, fell to 2.70% as of June 30, 2020, from 3.51% the prior year.”
As the Illinois’ GDP dipped by around 2.5% last year, the state’s ANPL settled at roughly 37% of economic output, up from a range of 28% to 32% over the previous four years.
With the state’s pension liabilities rating as the highest in the country, Illinois allocates about 30% of its budget to retirement benefits and debt service, a fixed-cost that stands at nearly three times the median for other states.
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