The states asking the federal government for a pension bailout has begun. Honestly, the federal government should NOT be bailing out their pensions. Not even remotely entertain the idea unless MAJOR reform is done. Illinois itself is now in junk bond status as a state financially.
Illinois needs more than $40 billion in relief from the federal government because of the coronavirus pandemic — including $10 billion to help bail out its beleaguered pension system, according to a letter the Illinois Senate president sent to members of Congress.
The letter, sent this week by State Senator Don Harmon, also seeks a $15 billion grant to “stabilize the state’s budget,” $9.6 billion in direct aid to Illinois’s cities, $6 billion for the state’s unemployment insurance fund, and hardship money for hospitals and nursing homes, among other things.
Though Mr. Harmon pointed to the pandemic as the reason Illinois needed help, the problems with its pension system far predate the coronavirus. It is considered by experts to be one of the worst funded in the nation.
The system is actually a complex family of pension funds. Five are operated by the state, for teachers outside Chicago, legislators, judges and other state workers. Hundreds of other pension funds are operated by municipalities.
The pension obligations are big enough to crowd other spending out of the state’s budget. The three main ratings firms — Fitch Ratings, Moody’s Investors Service and Standard & Poor’s — rate Illinois’s credit at just one notch above junk territory, citing ballooning pension obligations as one reason.
Source: New York Times
