* The AP ran a series of stories over the weekend about Illinois’ pension debt problem. Here’s the first lede…

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.

* A lot of very important numbers were buried in the middle of the stories. Like this…

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.

The argument that we don’t need to have all the money on hand right this minute so that if everyone retires at once they can all get paid immediately isn’t a bad one.

* And then there’s this…

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.

Those two factors (besides the complete lack of political will to change the very system itself) are what’s really driving this pension funding mess. We’re in a huge hole and we’ve deliberately rigged the system against ourselves.

* As the AP notes in another pension story…

The state owes the pension systems 8.5 percent interest on debt that it carries over every year. That amounts to $3.6 billion in interest - enough to give all public schools and colleges a 40 percent funding increase this year.

That interest rate is criminal.

* So far, investment returns are keeping us above water. Check out this report from the Illinois Commission on Government Forecasting and Accountability.

Last fiscal year, the state pumped $737.7 million into the Teachers’ Retirement System. Employees contributed another $826 million. However, the fund had to pay out $3.2 billion in benefits and refunds. Without a very strong investment return of $6.8 billion, the pension fund would have had to dip into existing assets, which totaled $41.9 billion as of the end of last fiscal year.

* What we need are different numbers. For example, how much do we have to pump in every year so the pension funds don’t deplete their assets to the point that they go broke? That’s a question for which I’ve yet to see an answer. The rapid aging of our teacher corps is readily apparent by looking at the numbers. Last fiscal year’s payout was almost three times what it was in Fiscal Year 1998.

Also, is it really necessary to stay on this 2045 timeline? The payoff date was essentially pulled from thin air. It was 50 years after the bill passed, so it probably seemed like a nice, round number.

* If something isn’t done soon, the pain is just gonna increase. The state contribution to the Teachers Retirement System jumped about $300 million from last fiscal year to this one, and will rise almost $400 million next fiscal year. The state’s Fiscal Year 2011 payment will be over $2 billion. And that’s just one pension fund. Add over a billion dollars for the State Employees Retirement System, close to $600 million for the university system and close to $90 million total for the judges’ and legislative systems. We’re looking at a scheduled $3.7 billion payment in that year alone. And it only goes up from there.

The governor’s people want to do another pension obligation bond plan. The $16 billion proposal would reduce this year’s payment by $500 million, and by a like amount in the near future.

The longterm impact on annual payments hasn’t been fully explained yet, and if the investments crash (the pension funds lost a bunch of money on the stock markets in 2001, 2002 and 2003) we could end up paying bondholders as well as the pension funds.

* The political viability of moving away from a guaranteed benefits plan is basically nil. Also, since teachers are not in the Social Security system, the employer share would likely negate any difference if we moved away from the current system. Discussion centered on those topics is wishful thinking, at best.

With all that in mind, what are your thoughts on this?