The clamor over the state’s estimated $13 billion budget deficit –and concerns over jobs and spending that prompted the protests — tends to drown out discussion of an issue that economists identify as perhaps the biggest long-term threat to Illinois’s financial health: The state’s shortfall of at least $61 billion in pension funding and the lack of any realistic plan to catch up.
In fact, the state’s pension troubles are even more dire than the official figures would indicate, according to a review of pension data and other economic studies by the Chicago News Cooperative. Illinois, which sold $3.47 billion in securities so it could make its required contribution to pension funds this year, is laying plans to sell at least $4.6 billion more to meet its obligations for fiscal 2011 — a move that is likely to jolt financial markets and many investors who thought years would pass before the state tried another sale of notes to cover its pension costs. Taxpayers ultimately will bear the burden as the need to pay for the bonds strains the state budget and threatens spending in other areas.