Illinois’ five state-run retirement systems need $16.8 billion in funding for the coming fiscal year, but state lawmakers only plan to pay $11.7 billion. That’s $5.1 billion less than needed for plans already approaching insolvency.
By Bryce Hill | Illinois Policy Institute
Illinois lawmakers plan to short state pension funds by nearly $5.1 billion compared to what the plans’ own actuaries estimate is needed to truly fund the systems, according to the latest report from the Illinois General Assembly’s Commission on Government Forecasting and Accountability.
Illinois’ pension funding law dictates the state must contribute more than $11.7 billion to the five state-run retirement systems in the upcoming fiscal year 2026 budget. But the plans’ actuaries have determined the five systems need more than $16.8 billion next year – and annually for at least the next 20 years – to fully fund the systems and begin paying down the state’s pension debt.
That’s because Illinois’ pension funding is governed by Public Act 88-0593, signed by then-Gov. Jim Edgar in FY 1996 – but also known as the “1995 pension funding law” and “Edgar Ramp.” It created a new 50-year funding policy with a target of 90% funding of the five statewide pension plans by fiscal year 2045.
The state’s contributions would gradually increase – the “ramp” – from 1996-2011. Afterwards contributions would become a set level of payroll in order to reach 90% funding by 2045.
Illinois is 15 years past the “ramp” but funding is still woefully short of what actuaries determine is needed to truly pay down the state’s pension debt. That debt was $143.7 billion in FY 2024.
For every year the state fails to make a full, actuarially determined contribution, the amount of money needed to pay for pensions in future years is expected to increase. Since fiscal year 2023 – the first year that COGFA reported actuarially determined contribution amounts – the amount the state needs to pay every year has increased by more than $1.9 billion.
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