Six Simple Steps: Reforming the Illinois State Universities Retirement System

Brown, Jeffrey; Cunningham, Stevan; Ghosh, Avijit; Merriman, David; Weisbenner, Scott

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Description

Title

Six Simple Steps: Reforming the Illinois State Universities Retirement System

Author(s)

• Brown, Jeffrey
• Cunningham, Stevan
• Ghosh, Avijit
• Merriman, David
• Weisbenner, Scott

Issue Date

2013-03-12

Keyword(s)

Illinois, policy, public, retirement, steps, employees, experts, resarch,

Abstract

Jeffrey Brown University of Illinois at Urbana-Champaign Steven Cunningham Northern Illinois University Avijit Ghosh University of Illinois at Urbana-Champaign David Merriman University of Illinois at Chicago Scott Weisbenner University of Illinois at Urbana-Champaign The 97th General Assembly ended in January without passing a pension reform bill; leaving the fate of the pension systems in the hands of a new assembly. However, solving the pension problem will not be any easier for this group of legislators. The unfunded liability of the state’s five pension systems grew by over $10 billion since the 97th assembly started and now exceeds $97 billion; including a liability of approximately $19 billion for the State University Retirement System (SURS). The task for the new assembly is clear: it must take decisive action this spring to pass a pension reform bill that creates a path to fiscal sustainability for the pension systems. As is well known, at the crux of the “pension crisis” is the state’s failure over many decades to make required pension payments. That failure has come home to roost and the state is now required to follow a “pension ramp” to make additional payments to make up for that past underfunding. In addition, the state needs to pay off the pension obligation bonds (POB) issued over the past decade. These payments—at a time when Illinois’ economy continues to be sluggish and the state owes billions of dollars in unpaid bills—are crowding out other state funding priorities and posing a major fiscal challenge. What is required at this time is a path to a solution—a plan to stabilize the pension systems. Many legislators, groups and individuals—including us—have offered suggestions for reforming the pension systems. Here we build upon previous suggestions to propose six steps to set the State University Retirement System (SURS) on the path to fiscal sustainability while ensuring retirement security for participants and honoring the constitutional guarantee against reducing already accrued benefits.

Publisher

Institute of Government & Public Affairs

Type of Resource

text

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