Lawmakers look to see if UI professor's pension fix adds up

Lawmakers look to see if UI professor's pension fix adds up

SPRINGFIELD — Illinois lawmakers took their first look Tuesday at a plan developed by University of Illinois mathematics Professor Runhuan Feng to issue up to $107 billion in bonds for payments to the state's underfunded pension systems.

No vote was taken in the House Personnel and Pensions Committee, and committee Chairman Robert Martwick, D-Chicago, stressed that the proposal was a work in progress and would be the subject of more legislative hearings.

The idea is being advanced by the State Universities Annuitants Association, which represents thousands of university employees and retirees.

"The plan we are outlining today will change the way we think about managing our debt," said Linda Brookhart, executive director of the association. "Please keep in mind that we do not present this as a final solution. We do this to start a very important conversation regarding pensions."

Martwick emphasized that he isn't wedded to the specifics of the plan.

"The idea is to securitize the unfunded liability by selling pension obligation bonds," he said. "I have spoken to numerous members of the media ... and I want to tell all of you what I've been telling all of them when they ask if I think this is a good idea. The answer is that I'm not smart enough to know that.

"These matters are far beyond my expertise. What I do know is that here in the state of Illinois, we owe a sizable chunk of money to our Tier 1 pension systems and we are going to have to pay that money back."

Under the plan, the state would attempt to market $107 billion in bonds with the proceeds given to the five state-operated public employee systems. Annual state contributions to pensions would continue, but at $8.5 billion a year until 2045, at which time the pension funds would be 90 percent funded, the current goal.

The state Commission on Government Forecasting and Accountability's most recent projection shows that under the current trend, annual pension payments could be as high as $17 billion in 2045.

Feng said the state could save as much as $103 billion under the plan.

But several lawmakers expressed skepticism and asked that economists, bankers and other financial experts be invited to testify about the idea before the committee took any vote.