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Pension Reform Hot Topic for Illinois Gov’s State of the State Address

State representative hopes for reversal of population migration trend to battle pension crisis.

By Chris Butera

State pension is one of several topics Illinois lawmakers hope Gov. Bruce Rauner will tackle later this month in his  State of the State address, the Illinois News Network reports.

In terms of tackling the pension debt, which currently stands at $130 billion in unfunded liabilities, State Rep. Mark Batinick and State Sen. Andy Manar know the road will be rough, with Batinick having proposed a buyout plan last year.

Batinick’s plan, which allows inactive members of pension systems an opportunity to receive  a lump-sum payment that can not only then be rolled over into other retirement accounts, but may also be included in a member’s will, seeks to save taxpayers billions. However, state residents are leaving at an alarming rate due to high taxes that help cover the pension deficit, and Batinick stressed that in order for pensions to be preserved, the state needs to retain its population.

“The more people you keep in this state,” Batinick told the Illinois News Network, “the more that that legacy cost is spread out amongst more people. And the more economic growth you have, the easier it’s going to be to deal with the pension crisis.”

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Manar added that if and when pension reform talks begin, affected employees should be involved in the negotiation process.

In addition to closing the state pension gap, educational funding and partisan gridlock were also among the topics lawmakers expect Rauner to address.

Rauner, who is up for reelection later this year, is expected to deliver his State of the State address January 31, with his state budget address to follow two weeks later on February 14.

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Home > News > Regulation > Fla. Bill Increases State Pension Contributions
Regulation

Fla. Bill Increases State Pension Contributions

Proposed legislation calls for an additional $178.5 million a year.

By Michael Katz

A bill introduced by the Florida state senate seeks to raise the employer-paid contributions for the $153.6 billion Florida Retirement System’s (FRS) retirement benefits by approximately $178.5 million annually beginning in fiscal year 2018-2019.  

 The public employers that will incur the additional costs are state agencies, state universities and colleges, school districts, counties, and certain municipalities and other governmental entities.

Among employer groups responsible for the additional contributions, Florida’s counties would be expected to kick in the biggest share at $66.4 million. School boards and state agencies would be responsible for $54.4 million, and $31 million, respectively, while universities and colleges would have to pony up another $16.6 million combined.

The rates are intended to fund the full normal cost, and the amortization of the unfunded actuarial liability of the FRS. With the modifications to employer contribution rates, the FRS Trust Fund will receive roughly $178.5 million more in revenue on an annual basis beginning July 1, 2018. In October, Florida’s State Board of Administration (SBA) lowered the pension fund’s assumed rate of return to 7.5% from 7.6%

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In its annual actuarial valuation of the FRS based on July 1, 2017, plan assets and liabilities, the state’s actuary Milliman, Inc. determined that the FRS had $28 billion in unfunded liability as a result of having total liabilities of $178.6 billion, and $150.6 billion in total assets.

“It’s an obligation of the state,” said Republican Sen. Rob Bradley, who is chairman of the Senate Appropriations Committee, according to The Palm Beach Post. “And we are comfortable with the current level of (pension) benefits in the Senate, with the understanding that when you change the assumptions, that requires more money to go to that area.”

For fiscal year 2017, which ended June 30, the FRS reported a 13.77% return on investments. As of June 30, the FRS consisted of 995 total employers, and had 637,643 active members.

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