Illinois’ public pension funds are warning they may have to sell off some assets — mostly stocks and bonds — because the state is behind in its payments to the funds.

Some of the funds have sold assets in the past but the amounts under consideration — as much as $3 billion by the teachers’ system — are larger than in the past.

The state has delayed payments due to its budget and liquidity crisis. It sold $3.5 billion of bonds to fund most of its fiscal 2010 pension payment and Gov. Pat Quinn hoped to sell $3.7 billion to cover the fiscal 2011 payment, but lawmakers so far have rejected the plan.

Quinn is expected to resurrect the plan in the annual fall veto session or again when the General Assembly convenes its new session in January.

Any asset sale would only exacerbate the poor funding of the state’s retirement funds, which closed out fiscal 2009 with unfunded liabilities of $62.4 billion for a funded ratio of just 50.6%.

If the state last year had not extended the time during which it can smooth out investment results, the unfunded liability would have stood at $77.8 billion, for a funded ratio of just 38.5%.

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