A new report from Moody's investors service says Illinois still faces "daunting pension challenges" despite a 2013 law intended to curb the state's pension costs. So do its cities.
The Moody's report lays it out starkly: Illinois' pension burden is significantly higher than other states. And yet Illinois' legal framework gives "very limited" flexibility for dealing with that.
Still, there's no way for credit analysts or anyone else to know what the result of a court battle over the 2013 law will be; unions and other retired public employees say reductions to their retirement benefits are unconstitutional.
Sen. Daniel Biss, an Evanston Democrat, who supports the law admits, it may be overturned. "That doesn’t mean the problem goes away, that means we'll have to try to find different approaches to tackling it," Biss says.
While that's clearly an issue for the state, because of how Illinois law deals with and funds local government pensions, it could also put a strain on municipalities at a time that many, especially Chicago, already have their own serious pension debts. Local government employees share the same constitutional protections as state workers, and state lawmakers generally determine the level of pension benefits local governments must provide.
