The pension crisis started decades ago when Illinois stopped funding the system properly.
Blaming a "depression" might extend an argument here. But it has nothing to do with the pension problem.
The pension problem is at crisis levels BECAUSE of the stagnant economy. The two go hand in hand. This is the paradox of running up debt to live a fantasy. As long as you are bringing in enough money to fund enough of your current liabilities, you can stay on your treadmill for a while. But when your revenue falls way off, due to a depressed economy, you suddenly have a mountain of debt, a structural problem that continues to run up debt. ... and your revenues are falling short of keeping you on your treadmill that kept the fantasy alive for a while.
Their public pension system had a huge number of state employees retiring in their 50s (something like 60 percent), many receiving full benefits. You are right, that in itself was just a bad promise made by politicians that was sure to bankrupt the system eventually. The stupidity is being fueled by debt, which is escalating at a massive rate -- $111 billion of debt in 2015, $130 billion last year. It's unsustainable. At the same time, the economy is languishing in a (yeah) depression, and their state budgets can't keep up with the stagnant tax revenues that economy produces, let alone help out with the massive pension shortfalls.
The whole thing creates a death spiral. They run state budget deficits, have a massive public pension shortfall (I agree, all of their making over decades -- but it is coming to a head now for a reason), and all of the debt they are running up rather than dealing with their structural problems ensures a credit crisis.
I didn't say that the pension put the state's economy in a depression, the way you read it. I said that there is a pension crisis at the same time the economy is in a crapper. The debt mess they are creating as a result, can not possibly end well.
