SPRINGFIELD - In the time it takes you to read this sentence, Illinois taxpayers will be another $200 deeper in debt.

The state's pension debt will exceed $44 billion this summer, increasing at a rate of about $120 per second, according to Gov. Rod Blagojevich's administration. The debt already tops $42 billion - enough to give every one of Illinois' 12.8 million residents a check of $3,300, or buy 937,000 Cadillacs at $45,000 a pop.

The combination of debt in terms of both money and percentage gives Illinois the infamous distinction of having the nation's worst pension problem, according to an Associated Press review of records and interviews with experts. And there's no solution in sight.

The staggering debt load for the five pension plans for state employees is a problem that's remained largely in the shadows for decades. The $42 billion "unfunded liability" - the difference between the systems' assets and what they owe employees in benefits - also is creating a real problem for state policy makers.

It's squeezing out money for other valued needs, such as education and health care. It means the state has less money for things like child care aid and fixing roads and schools, or paying some of the $1 billion it owes to Medicaid health care providers and others.

"Someday, those costs have to be paid," said Eden Martin, who heads the civic committee of the Commercial Club of Chicago, an economic improvement group. "There is no free lunch anywhere."

'Holidays' accumulate

Dating to the 1970s, state lawmakers pushed off the yearly payments they were supposed to make to cover the "normal costs" of pensions, or how much employees earned that year in benefits. These so-called holidays added up, and the debt multiplies over time.

"People didn't pay attention," said Rep. Kurt Granberg, a Carlyle Democrat who helped push for a plan to deal with pension payments. "They saw the pension obligations 20, 30 years down the road. It was fiscally irresponsible."

And the problem is getting worse every second.

At $42 billion, the debt grows by $3.6 billion a year - enough to let nearly 1 million people put $70 worth of gas in their vehicles every week for a year. Enough to cover $1 million ads for 3,600 companies during next year's Super Bowl.

Like an out-of-control credit card infatuation or a house mortgage where only a fraction of the cost is paid each year, new pension debt gets piled on top of old.

Here's what the debt means:

For decades, state employees and teachers have been promised yearly payments when they retire, based on their salaries and years of experience. The average monthly benefit ranges from $1,900 to $3,100 per month, according to estimates from the Illinois Retirement Security Initiative.

The pension funds have invested the cash paid into the systems by employees and state government to build up the coffers, but the value of those investments still falls far short of what's needed to cover all the benefits earned so far. That's what causes the $42 billion debt.

Lee Ann Gemmingen, who's about halfway through her career as a seventh-grade language arts teacher in Belleville, said she is frustrated that the future is uncertain even though every year she and thousands of others like her pay what they're supposed to contribute toward their retirement.

With no Social Security to fall back on, Gemmingen can't help but feel uneasy.

"You get that knot in your stomach kind of feeling," she said. "Am I going to have a pension left? I don't have anything else there."

Overall, the Illinois pension systems have about 63 percent of the funding they should to meet their obligations. According to the National Association of State Retirement Administrators, California has an estimated $54 billion debt in its systems, and several states have funding totals under 63 percent.

90 percent by 2045

But taken together, no other state can match Illinois' problem.

California's $54 billion debt is larger, but its pension systems are more than 87 percent funded. And states with worse funding percentages have much smaller pension funds - Connecticut's is the largest at about $14 billion, about one-third of Illinois' debt.

Experts say the 63 percent funded number is important because many states are at 80 percent or higher; some, such as Florida, are fully funded. The higher the number, the more confident employees can be that their retirement money is safe and will be paid to them.

State pensions will be paid whether the systems are 60 percent funded or 90 percent funded, lawmakers say - the funding percentage only matters if all state employees would retire at once.

"It's a little bit like saving up for college, except your kid never goes to college," said Sen. Don Harmon, D-Oak Park. "We're always saving up for retirements in 20 or 30 years."

And not long ago, Illinois was in even worse shape with pensions. Its funds were at 48 percent funded until $10 billion in pension borrowing bumped that up to 61 percent. A 50-year plan adopted in 1995 has the state on track to be up to 90 percent funding by 2045.

But here's the rub: The state agreed to pay the pension systems 8.5 percent interest - the estimated return on investments the systems would expect to get if they had all the money they were owed - for essentially borrowing money from the payments they should receive.

That's 8.5 percent every year. On $20 billion, that's about $1.8 billion a year. On $42 billion, it's $3.6 billion. When you add the actual cost of employees' benefits each year, the state faces nearly a $5 billion payment just to keep the debt from getting bigger.

"We're falling further behind, not even staying constant, and that's why we know we've passed the point where we have to do something," said John Filan, Gov. Rod Blagojevich's top budget adviser.

Many at the Capitol are concerned nothing significant will be done on pensions this year or even next. Lawmakers could be tempted to deal first with more politically popular programs, such as education and health care, and put off pension reform again.

"You don't get many kudos for paying pension expenses," Filan said. "There are competing choices."

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Spending comparison

Illinois' pension debt has more than doubled from the mid-1990s to about $42 billion today. The growth in the state's payments on that debt has far outweighed the cash increases lawmakers put into major needs such as schools and road improvements over the last few years.

Here is a comparison of yearly pension payment growth and increased spending for the State Board of Education and the Illinois Department of Transportation for the last decade, according to data provided by Gov. Rod Blagojevich's administration. (The 2004 increase and 2005 decrease for pensions reflect the proceeds of the $10 billion pension bond being put into the systems):

- 1999: $102 million increase for IDOT (3.9 percent); $573 million increase for ISBE (10.5 percent); $254 million increase for pensions (27.4 percent).

- 2000: $1.13 billion increase for IDOT (41.7 percent); $597 million increase for ISBE (9.9 percent); $116 million increase for pensions (9.8 percent).

- 2001: $379 million increase for IDOT (9.8 percent); $534 million increase for ISBE (8 percent); $124 million increase for pensions (9.6 percent).

- 2002: $106 million increase for IDOT (2.5 percent); $144 million decrease for ISBE (-2 percent); $116 million increase for pensions (8.2 percent).

- 2003: $69 million decrease for IDOT (-1.6 percent); $153 million increase for ISBE (2.2 percent); $152 million increase for pensions (9.9 percent).

- 2004: $667 million decrease for IDOT (-15.5 percent); $445 million increase for ISBE (6.2 percent); $7.6 billion increase for pensions (448 percent).

- 2005: $91 million increase for IDOT (2.5 percent); $465 million increase for ISBE (6.1 percent); $7 billion decrease for pensions (-76 percent).

- 2006: $119 million increase for IDOT (3.2 percent); $259 million increase for ISBE (3.2 percent); $786 million decrease for pensions (-35 percent).

- 2007: $770 million increase for IDOT (20.2 percent); $432 million increase for ISBE (5.2 percent); $437 million increase for pensions (30.5 percent).

- 2008: $442 million decrease for IDOT (-9.6 percent); $543 million increase for ISBE (6.2 percent); $685 million increase for pensions (36.6 percent).

Combined total: $1.8 billion increase for IDOT (58 percent); $6.5 billion increase for ISBE (71 percent); $3.6 billion increase for pensions (176 percent).

SOURCE: Associated Press

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A look back

Illinois' pension debt problem is the nation's worst when accounting for both the money owed and how underfunded the systems are. Here is a look back at how the pension problem developed, according to information reviewed by The Associated Press:

- 1950: An actuary for the Teachers Retirement System warns that state contributions "are far from adequate to meet the current requirements of the system" and the system's funding is "unsound."

- 1970s: For many years, the amount the state pays into the five pension systems is based on 100 percent of what those systems are expected to pay out each year in benefits. But the debt grows because the funding does nothing to address the much higher costs of benefits being earned by employees each year.

- 1982-1988: State contributions to the pension systems drop to an average of 60 percent of retiree benefits being paid out each year. That setup is ultimately dropped, and a flat payment is made each year into the systems.

- 1989: Lawmakers approve a 40-year payment plan to have the pensions fully funded, with a seven-year phase-in period. But state law doesn't require set payments each year and the funding guidelines are never met.

- 1995: Gov. Jim Edgar and lawmakers agree on a 50-year plan to get the pensions up to 90 percent funded by 2045. The plan requires the state to put in a certain amount of money each year and ramps up funding so each year more is required in state payments. Initial payments are smaller, requiring larger increases in later years.

- 2003: A downturn in pension systems investments puts the funds at just 48 percent funded, with a $43 billion debt. New Gov. Rod Blagojevich and lawmakers agree to borrow $10 billion in pension bonds, using most of that to pay down pension debt and get the systems to 61 percent funded. Some of the cash is used to pay other state bills.

- 2005: Governor pushes for lawmakers to adopt a host of pension reforms recommended by a commission of experts and lawmakers that would lower future pension costs for new state employees. Lawmakers approve some of the changes, saving the state tens of billions of dollars in the long-term. Others, such as raising the retirement age and service requirements, are left on the negotiating table.

- 2006-2007: Blagojevich and fellow Democrats in the Legislature agree to cut pension payments by more than $2 billion over two years to help pay other budget needs. The move forces the state to increase more if its payments over the next several years to get back on the 50-year payment track.

- 2008: The pension debt stands at $42 billion, and the systems combined are about 63 percent funded. That combination gives Illinois the worst pension funding problem in the nation, according to an Associated Press analysis of national data. The debt grows by $3.6 billion in interest alone each year.

SOURCE: Associated Press