Illinois pension contributions and the repayment of pension-related debt will rise by $562 million in fiscal 2012 to $6.4 billion, according to an audit from state auditor general William Holland.

That figure is up from $5.8 billion owed in the current fiscal year, which runs through June 30. The $6.4 billion includes a $4.8 billion payment to the state’s five pension funds and $1.6 billion for debt service.

The debt service payments include $590 million for a $10 billion 2003 general obligation pension bond issue, $794 million from a $3.5 billion 2010 GO note sale, and $195 million for a $3.7 billion 2011 GO pension bond issue. 

The 2010 and 2011 issues helped cover much of the state’s required contributions for those years. About $2 billion of the 2003 deal covered current-year contributions. The remainder went toward the unfunded liability.

The state’s annual required contribution to its pension funds and its debt service obligations will rise to $6.8 billion in fiscal 2013, $7.3 billion in fiscal 2014, and $7.9 billion in fiscal 2015, according to the report.

The unfunded liabilities of Illinois’ five pension funds rose to $75.7 billion at the close of fiscal 2010 from $64.2 billion in fiscal 2009, based on a smoothed valuation of investment results.

If the state still adhered to a fair market valuation that looks only at the current results, the liabilities would have risen to $85.6 billion from $77.9 billion.

Illinois shifted from a fair-market valuation in fiscal 2009 to one that smooths investment results over five years.

The funded status of the pension funds fell to 45.4 % at the close of fiscal 2010 from 50.6% a year earlier, based on smoothed results. Under a fair-market valuation, the funded ratio fell to 38.3% from 38.4%.

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