Calling a half-empty glass full doesn't fill it up.
In a June 2 cover-story on the Illinois state budget (“$42 billion ‘fiscal discipline’ budget OKd”), the Chicago Tribune reported that the spending will “meet the state’s obligations to fund schools and make its required annual contribution to its severely underfunded pension plans.”
Not to make a mountain out of a molehill, but this type of reporting reinforces a long, slow-moving train wreck of misleading statements by public officials.
Spending plans that “fully fund” pension obligations by making statutorily required contributions -- amounts required by legislators, by law -- do not necessarily fully fund pensions. In fact, Illinois has a sad history of passing laws with funding that falls far short of actuarial requirements -- the amounts necessary to keep pension (and related retirement health care) debt from rising over time.
For an example, take a peek at the Illinois Teachers’ Retirement System (TRS). Their annual report for 2020 is available here. The table on pdf page 2 shows that the system has accumulated more than $50 billion in invested assets, but this massive amount actually falls far short of the nearly $140 billion in present value obligation for future pension payments, leading to a nearly $90 billion unfunded liability.
A table on page 54 of the report (pdf p. 57) helps to illustrate how this was “accomplished.” Statutory contributions – the amounts required by laws passed by Illinois legislators and signed by the state governor – fell short of the actuarially determined amounts every year in the ten years ended 2020, and the annual shortfall “rose” from about $420 million in 2011 to $3.1 billion in 2020 – a $3 billion shortfall for just a single year.
The practice of distributing unfunded promises to pay money in the future has been a key of the tool chest that politicians have employed in misleading the citizenry that Illinois has lived up to constitutional balanced budget requirements, when in truth it has done anything but.