The need for pension changes remains urgent, according to a state budget watchdog. The issue is off the boil now that the legislative session is over, but it must be resolved, with pensions’ share of state revenue having grown from 3 percent in 1995 to 22 percent now, says Laurence Msall, president of the Civic Federation.
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“It’s projected that the state’s contributions for pensions will rise to almost 30 percent of the state budget. That is not sustainable, and is a grave concern not just to the Civic Federation, but the credit rating agencies, who have been threatening the state of Illinois with another downgrade, or perhaps a double downgrade, if they don’t stabilize the state budget,” he said. In the coming fiscal year, the state will spend $5 billion on pensions, and another $1 billion on debt service for pension-related borrowing. A key change, Msall says, would be to reduce the cost-of-living adjustment that pensioners receive, which is now 3 percent compounded annually. The governor has proposed making that a 3 percent simple adjustment, which would not start until several years into retirement.