Federal, State, and municipal governments are feeling the recession/ depression. This is showing up in the deficits, and what and who they owe. Illinois is in one of the worst positions nationally in this regard. Since they are on the “cash basis” of accounting, there is no real chronicling of what are presently the state’s accounts payables, or outstanding liabilities. We have been getting some information in the media. The numbers keep growing. And… we can speculate.
We know that Illinois has NOT been making the requisite payments each year into the pension funds to meet the coming obligations. We know that 16 years ago, under Governor Edgar, the pension funding was current. We now know that the Prairie State is in arrears. The big Q is what is the liability?
Last week, I was forwarded an analysis that really set me on end. According to a report by the American Enterprise Institute, public pensions are under funded by more than $3 trillion nationwide. Illinois pensions alone are $208 BILLION UNDERFUNDED using realistic measures. The overall level of funding is 29% --- the worst in the entire nation. Illinois SERS pensions at 23% of funding is $36 BILLION in arrears, Illinois teachers pensions at 28% of funding is $98 BILLION in arrears, Illinois Universities pensions at 30% of funding is $35 BILLION in arrears, Chicago Teachers pensions at 43% of funding is S16 BILLION in arrears, and Illinois municipal pensions at 47% of funding is $24 BILLION in arrears. To get this money, total population and corporations of the state will have to be taxed. This will not occur without a fight --- so Illinois is looking for an “out” from these obligations and also what it owes schools, health care providers, and nursing homes. Be prepared to get stiffed!
It will go to the courts in 2011. States, unlike individuals and corporations however, cannot just file for bankruptcy and just walk from what they (in theory) owe. They will need special dispensations and approvals from the US Congress. This is already being discussed in the halls of Washington, DC and in the major law firms across this nation.