Fitch downgrades Illinois outlook to negative
Illinois Gov. Pat Quinn speaks to reporters Wednesday on pension reform legislation.
Illinois faces a possible downgrade by Fitch Ratings on $26.2 billion of general-obligation debt after lawmakers this week failed to repair the nation's worst- funded state retirement system.
Fitch today changed its outlook on the state to negative from stable. The company rates Illinois A, its sixth-highest grade. The state has unfunded retirement obligations of about $95 billion, according to the company.
The outlook "reflects the ongoing inability of the state to address its large and growing unfunded pension liability," Karen Krop, a Fitch analyst, wrote in a report released today.
The state had the weakest pension system in the U.S., with 39 percent funding for five major groups of public employees, according to the Civic Federation, a Chicago-based nonprofit research group.
"The burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable," Krop said.
Moody's Investors Service and Standard & Poor's also grade the state their sixth-highest level.
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