Illinois Death Spiral

The Illinois pension fiasco continues to plague the state with embarrassment and near-fatal fiscal consequences. Late Monday, January 24, Governor Quinn confirmed that the Illinois State Pension System and state officials connected with it are subject to an SEC investigation.  According to Moody's Investor Service, the pension system is funded to only approximately 50% of the $136-billion liability.  Even that shortfall is likely understated; it is believed to be closer to $150 billion.  Furthermore, Moody's states that the underfunding is among the worst of states, resulting from frequently skipping contributions to the fund that were recommended by the actuaries.   According to the Wall Street Journal, the SEC inquiry focuses on statements concerning an overhaul measure passed in 2010 meant to shore up the system, but which thus far has failed to achieve the objective.  Moody's went on to state that one issue being examined is the practice of taking...(Read Full Article)