(The Center Square) – A new report shows that Illinois is on the hook for a tremendous amount of post-employment benefit liabilities.
The American Legislative Exchange Council released its “Other Post-Employment Benefit Liability” report, which ranked Illinois 46th in the country. It shows that Illinois has about $103 billion in unfunded post-employment liabilities. That is on top of around $140 billion in unfunded pension liabilities.
The report details how much states owe in benefits to retired public employees upon retirement outside of a pension. Those benefits include health insurance, life insurance and Medicare Supplement Insurance.
“The burden on taxpayers and competing state spending priorities posed by defined OPEB plans will be substantial if there aren’t significant policy reforms,” said ALEC Chief Economist and Executive Vice President of Policy Jonathan Williams.
Nationwide, current unfunded state OPEB liabilities are more than $1.14 trillion, or roughly $3,500 for every American man, woman and child. Only four states have a higher amount than Illinois, including Texas, New York, California and New Jersey.
Two states, Nebraska and South Dakota, have zero liabilities after implementing defined contribution health care benefits.
“OPEB liabilities in many cases are much different than pension liabilities because they are not protected by state constitutions or by contract law,” said Williams.
OPEB plans have worse overall funding ratios than state pension plans. With an average funding ratio of merely 13.46%, many have no pre-funded assets whatsoever, allowing liabilities to grow rapidly year over year.
“By ignoring the trillion-dollar OPEB problem, state policymakers are putting promised benefits in jeopardy and saddling taxpayers with hundreds of billions of dollars in debt,” said ALEC Vice President of Policy Lee Schalk. “Making the necessary OPEB reforms now allows state leaders to keep their promises to everyone.”
