HR0575 95TH GENERAL ASSEMBLY

HR0575 LRB095 12638 AMC 37921 r

HOUSE RESOLUTION

WHEREAS, Article XIII, Section 5 of the Illinois Constitution of 1970 requires the State to provide pension benefits to members of State-sponsored retirement systems; and

WHEREAS, The State of Illinois supports five retirement plans on behalf of State employees, university employees, teachers, judges, and members of the Illinois General Assembly; and

WHEREAS, It is the State's responsibility to provide adequate funding to support State pension liabilities so that future generations are not held responsible for current expenses; and

WHEREAS, Deferrals of the State's obligations to its annuitants contributed to an unfunded pension liability in State-sponsored systems of $19 billion in 1995 to $43 billion in 2003, resulting in a funded ratio of 48% in 2003, the worst funded ratio of any of the fifty States and significantly under-funded in comparison to the national average of 91.1% among 101 public retirement systems according to the 2003 Public Fund Survey conducted by the National Association of State Retirement Administrators; and

WHEREAS, The Civic Committee of the Commercial Club of Chicago's Task Force on Illinois State Finance, in recognition of this crisis, reported that unless changes are made "commitments to State employees will become a huge burden on future generations or will not be kept at all"; and

WHEREAS, Annuitants of the State's benefit systems rely on the security provided by pension benefits to meet their daily necessities, including food, housing, and healthcare; and, as the Civic Committee has recommended, "Illinois should keep its obligations and commitments to those who have worked for it and who will work for it in the future. Failure to fund adequately to cover such obligations is unfair to employees whose rights have vested"; and

WHEREAS, Over the next three years, in order to meet the statutory funding formula, the State will be required to increase annual contributions to the pension systems and debt service on outstanding pension obligation bonds, reducing available State resources to fund growth in other core services provided by the State, such as education and health care, to less than $200 million (or less than 1% growth) of natural revenue growth per year; and

WHEREAS, Further deferrals of the State's pension liabilities will force future generations to pay billions in additional interest on the unfunded liabilities of the State between fiscal years 2008 and 2045; and

WHEREAS, In recognition of the funding crisis caused by the State's persistent under-funding of its pension obligations and other past deferrals, the Civic Committee has stated that "Good government in a democracy involves making hard choices. The citizens who live in Illinois and pay taxes here, and the businesses located here, all must make such choices. Their government should do no less. Avoiding such choices undercuts democracy."; therefore, be it

RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE NINETY-FIFTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that the State's pension funding system is in a state of crisis, and that the State will continue to unnecessarily pay billions in interest costs alone if the unfunded pension liability does not receive an immediate and significant infusion of funding, the General Assembly is in agreement that a solution to this crisis must be adopted prior to adjournment of 2007 Spring Session of the Ninety-Fifth General Assembly; this action is necessary to adequately secure existing pension obligations, reduce long-term interest costs on current obligations, more effectively manage State funding requirements, and ensure that future new revenues will not be consumed solely by escalating pension contributions; and be it further

RESOLVED, That the General Assembly shall enact any such additional protections necessary to ensure that no further State pension liabilities may be deferred to future generations of Illinois citizens.