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Illinois Pensions in a Fiscal Context: A (Basket) Case Study

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  • Jeffrey R. Brown
  • Richard F. Dye

Abstract

Illinois’ public pensions are among the worst funded in the nation. We present evidence that the main reason for Illinois' underfunding is a history of making inadequate contributions, dating back to the origins of the state's pensions. We discuss the recent history and legal status of pension reform efforts in the state. Using a fiscal model of the state's finances, we project how Illinois' fiscal situation may evolve in the future. A key finding is that with or without pension reform, Illinois will continue to face significant structural deficits that will require revenue increases and/or additional spending cuts to address.

Suggested Citation

  • Jeffrey R. Brown & Richard F. Dye, 2015. "Illinois Pensions in a Fiscal Context: A (Basket) Case Study," NBER Working Papers 21293, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:21293
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    References listed on IDEAS

    as
    1. Brown, Jeffrey R. & Pennacchi, George G., 2016. "Discounting pension liabilities: funding versus value," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(3), pages 254-284, July.
    2. Robert Novy‐Marx & Joshua Rauh, 2011. "Public Pension Promises: How Big Are They and What Are They Worth?," Journal of Finance, American Finance Association, vol. 66(4), pages 1211-1249, August.
    3. Andrew G. Biggs, 2014. "Not so modest: Pension benefits for full-career state government employees," AEI Economic Perspectives, American Enterprise Institute, March.
    4. Jeffrey R. Brown, 2014. "Reforming Public Pensions Subject to Political and Legal Constraints: The Illinois Experience," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(4), pages 941-964, December.
    5. Jeffrey R. Brown & David W. Wilcox, 2009. "Discounting State and Local Pension Liabilities," American Economic Review, American Economic Association, vol. 99(2), pages 538-542, May.
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    Cited by:

    1. Christian Dippel, 2019. "Political Parties Do Matter in U.S. Cities ... For Their Unfunded Pensions," NBER Working Papers 25601, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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