Lake County Gazette

Republican state Rep. Dan Ugaste worries the worse still may be yet to come with the state's long troubled pension system.

S&P says Illinois’ “poorly funded” pensions will continue to stress state and local government budgets as the state sees "weak demographic trends," and "shrinking population," Ugaste posted on Facebook.

Even with the state making supplemental contributions to the system, S&P Global Ratings in its “Pension Spotlight: Illinois" report said it expects, "costs will keep rising because contributions are significantly short of meaningful funding progress, plans are poorly funded and the Illinois Pension Code allows plans to use assumptions and methodologies that defer costs.”

With all five of the state's pension funds covered at just 42.4 percent on the whole, The Illinois Auditor General pegs Illinois’ unfunded pension liability at around $140 billion.

With police and firefighter pensions funded at just around 56 percent as recently as in 2020, some have long been pushing for the two funds to be consolidated, but the plan now faces a legal challenge in the Illinois Supreme Court.

While the report does not include a rating action, S&P added, “Pensions have a high likelihood of stressing state and local government budgets despite the state making supplemental contributions.” 

Illinois law requires a pension funding ramp for the decades ahead and state officials moved more than a decade ago to create a second tier pension that offers fewer benefits for members.

"The enactment of a new benefit tier in 2010 is generating significant cost savings today but recent efforts have been made to increase these benefits in an attempt to avoid violating social security's safe harbor provision," said S&P Global Ratings credit analyst Joseph Vodziak. 

Serving in the 65th District for the past four years after first being elected in 2019, Ugaste has advocated for more fiscal restraint and discipline in Springfield. With his current term running through 2025, Ugaste currently sits on the House's Labor & Commerce, Energy & Environment, Judiciary-Civil, Police & Fire and Transportation: Regulation, Roads & Bridges committees.