Illinois Gov. Pat Quinn released an analysis this week warning that the state’s rising pension payments will surpass school aid by fiscal 2016 without pension reforms.

Quinn wants to make the case for reforms, including making local districts responsible for teacher pension payments rather than the state, ahead of a special legislation session set for Aug. 17.

Quinn called the special session to take up pension reform efforts that stalled during the regular session this past spring.

“Illinois cannot continue down this path at the expense of our children,” Quinn said in a statement. “We must enact comprehensive pension reform that eliminates the unfunded liability to repair our pension system and give the next generation the education they deserve.”

The review, prepared by the Illinois Office of Management and Budget, concludes that pension payments of $5 billion in the current fiscal year will rise to more than $6 billion in the coming years and force the state to cut education spending.

According to the analysis, continued cuts to education as a result of fast-rising pension costs will cost downstate and suburban school districts far more than assuming the responsibility to pay for their compensation decisions over time.

Under a phased-in transition of teacher pension payments, downstate and suburban Chicago school districts would assume an estimated $49 million in new normal pension costs in fiscal 2014. Without reform, the districts would see their budgets reduced by $152 million, according to the study.

The state’s unfunded pension liabilities total $82.9 billion, for a 43% funded ratio, the worst among the states. Pension payments will consume $5 billion of the state’s $33.7 billion fiscal 2013 budget, up $1.1 billion from the previous year.

In April, Quinn unveiled a pension overhaul that asked workers to voluntarily change to a new plan with reduced cost-of-living increases in order to preserve their health care perks in retirement. He also proposed the gradual shift in teacher payments.

Republican opposition to the school district shift over fears of the impact of local property taxes derailed it, since Democrats refused to drop their support for it.

Rating agencies have warned the state needs to act on pension reform to stabilize its finances and ratings.

Also this week, House Speaker Michael Madigan, D-Chicago, said he would call up for a vote a bill previously passed by the Senate that includes the COLA changes for two of the state’s five pension funds.

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