When Illinois Governor J.B. Pritzker (D) signed his $55.1 billion 2026 budget into law in June, it was the state’s biggest-ever yearly spending plan and included $700 million in new tax hikes. It also provided Pritzker — a potential 2028 Democratic presidential aspirant — an opportunity to lob some political shots at President Donald Trump.

“While the Trump administration goes on Fox News lying about being fiscally responsible, Illinois is showing a better way: Balancing the budget while maintaining the programs that most people rely on,” Pritzker said. “Congress is about to pass a federal budget that has one of the largest budget deficits ever in a year without a war or a pandemic. By contrast, Illinois is balancing its budget and prudently improving its fiscal condition.”

What Pritzker didn’t say was his own budget included misleading claims about state pension obligations being “fully funded.” Such statements may well violate a “Cease and Desist” order issued in 2013 by the Securities and Exchange Commission (SEC) due to Illinois’s history of chronic misrepresentations of its massive unfunded state pension obligations.

Illinois is the worst of the 50 states on unfunded pension liabilities, according to data compiled by Truth-in-Accounting, a Chicago-based nonprofit that advocates for actuarial transparency at all government levels. The state has almost $114 million in pension assets and $262 million in pension liabilities, producing a nearly $149 million unfunded pension liability.

In other words, only 43% of the state’s pension debt is covered. By comparison, in other large states with Democratic governors, Massachusetts’s debt is 34% unfunded, California’s debt is 23% unfunded, and New York’s is only 9% unfunded.

A major factor in the Illinois pension system’s financial ills is its generosity to the more than 55,000 employees and nearly 240,000 retirees. A 2024 Illinois Policy Institute (IPI) study found nearly 32,000 pensioners receiving $100,000 or more annually. Seven of those received in excess of $500,000.

“While $100,000-plus pensions accounted for just 13 percent of all annuitants in the five statewide pension systems, data shows they collected nearly one-third of the total $13.2 billion paid out to retired government workers last year,” the IPI study said.

A more recent IPI analysis pointed to the state government’s rapidly increasing compensation, reporting that “state workers are now taking home an average salary of $85,689. That’s $7,422, or 9.5 percent, more than the average private sector worker in Illinois earning $78,267. In total, Illinois public sector pay has grown 57 percent faster than the private sector between 2021 and 2024.”

The potential SEC problem for Pritzker results from the statement that “the FY26 budget proposal fully funds the certified pension contribution of $10.6 billion from the General Funds.” The same document adds that “the State contributed an additional $700 million to the systems above certified amounts across FY22 and FY23.”

The key words in those statements are “certified pension contribution.” Being “certified” sounds like the $10.6 billion payment made towards reducing the unfunded pension debt is what the law requires. And it is, at least according to the Statutory Funding Plan that state lawmakers adopted in 1994 under Republican Governor Bob Edgar. The Edgar Plan allowed “certified” payments to cover 90%, not 100%, of the required payment on a schedule for reducing the pension debt.

For years after the Edgar plan was adopted, state officials failed in municipal bond offerings to be clear that their 90% funding mechanism would still leave the state liable for billions of dollars in pension debt. Pritzker’s 2026 budget continued that practice by making a $11.7 billion certified payment when state actuaries calculated that, based on Government Accounting Standards Board guidelines, $14.6 billion was needed to qualify as “fully funding.”

But in the 2013 enforcement action, the SEC told Illinois officials they had to be upfront with potential bond buyers to avoid violating federal anti-fraud laws.

“The State omitted to disclose in preliminary and final official statements material information regarding the structural underfunding of its pension systems and the resulting risks to the state’s financial condition. Enacted in 1994, the Illinois Pension Funding Act (the ‘Statutory Funding Plan’) established a pension contribution schedule that was not sufficient to cover both (1) the cost of benefits accrued in the current year and (2) a payment to amortize the plan’s unfunded actuarial liability,” the SEC said in its action.

And in a 2020 bulletin, the SEC advised that “the anti-fraud provisions apply to all statements made by municipal issuers that provide information that is reasonably expected to reach investors and trading markets.” In other words, official documents like the 2026 Budget are required to comply with the 2013 order to be upfront about unfunded pension obligations.

That means, according to TIA, that “despite Illinois’ agreement to the 2013 SEC cease-and-desist order, aspects of Governor Pritzker’s public statements may warrant further scrutiny to determine whether the state is providing accurate, complete, and non-misleading information regarding its pension obligations and funding practices. In light of the SEC’s continuing focus on municipal securities disclosure, it may be appropriate for the agency to re-examine Illinois’ municipal bond disclosures and related public statements to assess compliance with federal securities laws.”

The Washington Stand repeatedly contacted Pritzker’s media relations office and requested comment regarding the disparity between governor’s “fully funded” claim and the facts about the underfunding of the state’s future pension debts.

Questions about Pritzker’s financial management aren’t limited to accounting for unfunded liabilities of Illinois state government pensions. State officials recently released their Annual Comprehensive Financial Review (ACFR) for 2023. Such reviews should be released no later than 180 days after the covered fiscal year, according to the Government Finance Officers Association (GFOA). The most recent Illinois report was made public 774 days after the end of the 2023 fiscal year.

“Illinois’ elected leaders have compromised transparency and accountability by making critical budget, borrowing, and spending decisions without access to two years’ worth of critical financial data. Taxpayers deserve timely, accurate financial reporting to ensure their money is managed responsibly,” TIA observed.