Illinois pension reforms are “a credit positive” for the state with the lowest credit rating in the nation, Moody’s Investors Service said in a brief report Friday. But the firm’s negative outlook on the state’s A3 rating was left unchanged.
According to Moody’s, Illinois enacted what is probably the largest pension reform package seen in any state so far, a $21 billion reduction in the state’s $100.5 billion unfunded pension liability.
Next closest is New Jersey, which eliminated cost-of-living allowances rather than modify them as Illinois did, cutting its pension debt by nearly $18.5 billion.
Moody’s note essentially reiterated what its analysts and those of other Wall Street credit rating agencies said after the Dec. 3 vote: Reductions in the state’s pension costs appear to be significant, totaling $160 billion over 30 years, but until verified by independent actuaries and upheld in court, there’s a risk those savings won’t materialize.