Some see Illinois’ dwindling population hurting public pensions

(The Center Square) – Illinois has seen an exodus of residents over the past several years. Some say the outmigration is contributing to the state’s growing pension problems.

Illinois currently spends about $10 billion a year on public pensions, and the state’s five systems have an unfunded liability of at least $140 billion. Some Illinois legislators are pushing for more funding for pensions while others have raised concerns of having Tier 2 employees hired after 2011 with fewer promised benefits paying more to support those employees in Tier 1 with more generous benefits.

A recent report from the American Legislative Exchange Council found each man, woman and child in Illinois is on the hook for about $37,000 to pay off public employee pensions, the second highest amount of all states after Alaska.

U.S. Census data shows nationwide, the median household income was $74,755 in 2022, down around 1% from the year before when adjusting for inflation. Illinois is one of 17 states to see its average inflation-adjusted household income decrease in 2022.

Other data from the U.S. Census on state-to-state migration released earlier this year shows that Illinois gained 4,000 residents from nine other states. But about 150,000 left for other states. That means 146,000 Illinoisans on net left in 2021.

Illinois state Rep. Martin McLaughlin, R-Barrington Hills, said the state pension systems suffer when people leave the state.

“We are having a smaller and smaller number of employees supporting the top, and that demographic structure itself is a big problem,” McLaughlin told The Center Square. “That’s not changing because the only way to change that is to grow Illinois’ population, grow Illinois businesses, grow Illinois employees, so they can support those at the top.”

Fewer people means less tax money going into the pensions, he said.

“Some of the people that are on state pensions think the money comes from the state, it doesn’t. It comes from the people around you,” McLaughlin said.

McLaughlin said there is currently only one business that is growing in Illinois.

“[Gov. J.B. Pritzker] is proud of all the businesses things he’s done, but the biggest business the governor has grown in Illinois is moving companies over the last four years,” McLaughlin said.