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Unfunded liabilities for Illinois' five state retirement plans rose to $111 billion total in the fiscal year ended June 30, up 6.1% from the year before, said a recent report from the state Commission on Government Forecasting and Accountability.
The aggregate funded status for the five retirement systems fell to 41.9%, down one percentage point from June 30, 2014. Assets and accrued liabilities totaled $80 billion and $191 billion, respectively, for the five pension funds.
The figures are based on the fair market value of assets. From an actuarial perspective with asset smoothing, the pension plans' unfunded liabilities totaled $112.9 billion at the end of fiscal year 2015. Assets and accrued liabilities totaled $78.1 and $191 billion, respectively, for a funding ratio of 40.9%.
According to the report, inadequate state contributions and strengthened mortality assumptions contributed to the funding decline.
On a market value basis, Illinois Teachers' Retirement System, Springfield, reported the highest unfunded liability at $61.7 billion, while the General Assembly Retirement System reported the lowest at $273.6 million.
However, Illinois Teachers reported the second-highest funding ratio among the five systems at 42.9%. Illinois Teachers' $46.4 billion in assets as of June 30 makes it the largest of the five retirement systems. GARS, with only $54.6 million in assets, reported the lowest funding ratio in fiscal year 2015 at 16.6%.
The $17.4 billion Illinois State Universities Retirement System, Champaign, had the highest funding ratio at 44.1%; the $15.3 billion Illinois State Employees' Retirement System, 37.5%; and the $833.9 million Illinois Judges' Retirement System, 36%.
In May, the Illinois Supreme Court ruled that a state pension reform law — which reduced cost-of-living adjustments, capped pensionable salaries and raised retirement ages — was unconstitutional. The law was expected to reduce Illinois' pension contributions by roughly $145 billion over the next 30 years.
The commission projects Illinois' pension contributions will rise to $7.9 billion in fiscal year 2017, up from this year's $7.5 billion. It also projects unfunded liabilities for the current fiscal year could reach $114.8 billion.
Meaghan Kilroy writes for Pensions & Investments, a sister publication of Business Insurance.
(Reuters) — Chicago tried to convince a sometimes skeptical Illinois Supreme Court on Tuesday that a 2014 law deserves to survive a constitutional challenge because it aims to save two of the city’s retirement funds from insolvency by guaranteeing adequate funding.