What is Illinois’ debt time-bomb?

  • Because it has US$111bn in unfunded public pension obligations (it is the most underfunded in absolute terms in the US, and the largest relative to state revenue).
  • Happened for 2 reasons: [1] Years of politically motivated, over-generous public sector entitlement offerings (i.e. fat pensions).
  • [ 2] Absurd assumptions about returns on investments (i.e. payment payment commitments assume the state's investments will yield 7.5% p/a over 30 years).
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