Moody’s released a report last weekend measuring the pension liabilities of all states relative to state revenue. By that measure, Illinois has the worst pension debt in the country, according to the report. From the Sun-Times:
Illinois’ pension liability as a percentage of state revenue is far and away the nation’s highest, according to a new report from a major credit-rating agency.
The state’s three-year average liability over revenue is 258 percent, Moody’s Investors Service says.
The next closest? Connecticut, at about 200 percent.
The Moody’s report averaged the Illinois percentage from 2010 through 2012. In 2012 alone, the state’s rate was 318 percent.
The state has a $100 billion deficit in the amount of money that should be invested in the portfolios of five state-employee pension accounts.
[…]
In the latest report, Moody’s sets [the median] level at 51 percent.
Several larger states, similar to Illinois, are well below the median and rank in the 10 lowest percentages of adjusted net pension liability, including Ohio, Florida and New York. The group also includes Illinois neighbors Iowa and Wisconsin — the latter having the lowest level next to Nebraska.
Only three others states — New Jersey, Hawaii and Louisiana — have rates higher than 120 percent.
The report acknowledged the state’s pending pension reform, which currently sits in court. From the Sun-Times:
Lawmakers adopted an overhaul plan last fall that cuts benefits and increases worker contributions to significantly cut that debt.
But the law has been challenged in court. A Sangamon County judge indicated last week he wants the case moved swiftly to appellate courts, suggesting the Illinois Supreme Court’s rejection in July of a law affecting retiree health insurance could prove a model for the pension challenge.
Moody’s points out that even if the pension overhaul gets constitutional approval from the state’s high court, it still will take decades for Illinois government to dig out of its financial hole.
Photo by Chris Eaves via Flickr CC License