PROGRAM UPDATE, MARCH 25, 2022
GOVERNOR PRITZKER SIGNS BILL THAT WILL ESSENTIALLY ELIMINATE PROGRAM UNFUNDED LIABILITY
On March 25, 2022, Governor Pritzker signed a bill providing a Fiscal Year (FY) 2022 supplemental appropriation that includes a $230 million lump sum payment to the Illinois Prepaid Tuition Trust Fund that will essentially eliminate the College Illinois!® Program’s unfunded liability.
Program enrollment has remained closed since 2017, as ISAC engaged with legislators and the Governor’s office to help define proposals to address the Program’s unfunded liability.
Among the bills and initiatives that ISAC has supported to address the unfunded liability and protect plan holders, the agency advocated annual state payments to the Illinois Prepaid Tuition Trust Fund to begin to address the unfunded liability right away, before it became immediately necessary to call upon the moral obligation of the State of Illinois. Starting immediately to make level payments that continue for more than a decade would fulfill the state’s commitment to the Program’s contract holders and beneficiaries and save the state money in the long run, allowing it to budget intelligently, with predictable, manageable payments.
Thanks to the support of Governor Pritzker and the General Assembly, the Illinois budget bill signed by the Governor in June 2021 began to address the Program’s unfunded liability with two payments from the state totaling $50 million.
Because the state’s current year revenue has been much higher than predicted, the Governor advocated using a significant portion of those unexpected FY 22 funds to pay down outstanding debts in several categories. That includes making a single payment of $230 million to essentially eliminate the College Illinois! unfunded liability this year, rather than continuing to seek smaller, annual appropriations that reduce the unfunded liability over time. This upfront funding approach is expected to save the state $75 million over time—making it a win not just for contract-holders but for all Illinois taxpayers.
This funding came after consistent engagement with elected officials to address the unfunded liability, including the critical feedback to legislators provided by many contract holders who advocated for funding.
The Program retains a substantial investment portfolio in a separate trust fund to pay obligations. According to the June 30, 2021 Actuarial Soundness Report, Program assets totaled about $571.1 million, corresponding to a 70.6% funded ratio. While actuarial reports necessarily represent a point in time and will change in the future up or down based on a variety of factors, it is expected that with the $50 million in funding received in 2021 and the $230 million to be provided this year, the Program will essentially be fully funded.
More than 8,900 students attended college in the 2020-21 school year using College Illinois! benefits of approximately $108 million. The Program is permanently closed to new enrollments, and will continue to operate as usual for the beneficiaries of the nearly 25,000 current contracts, with no change in benefit payments, customer service, or plan administration.
Program financial statements, including the June 30, 2021 Actuarial Soundness Report, are available at https://www.collegeillinois.org/AboutCollegeIllinois/529Financials.html.