Tuesday, October 30, 2012
Experts Say Teachers’ Retirement System Bleeding Out
Illinois’ teacher pension system could go broke if the state does not figure out a way to fully fund the system soon, the leader of the retirement system and others have warned again Monday. “TRS faces the real risk of future insolvency because of insufficient state funding over the last 30 years,” said Dick Ingram, executive director of the Teachers’ Retirement System.
Illinois’ Teachers’ Retirement System is seeking $3.4 billion from the state for its portion of the pension costs for fiscal year 2014. That’s about $500 million more than the system sought from the state for the previous fiscal year. “TRS absolutely will be able to meet its obligations to retired teachers in the near future, but we cannot guarantee retirement security for future generations of teachers unless the state meets its total obligations,” said Ingram.
The latest funding increase comes on the heels of dismal investment returns during the last fiscal year. TRS announced last week that it earned a mere .76-percent return on its investments, primarily because of a negative 11.71-percent rate of return on international stocks. In fact, TRS says, the state’s latest calculated contribution falls nearly $942 million short of what it would take to fund the pension system under standard actuarial calculations.
A heated debate over shifting pension costs to local school districts is ongoing among state lawmakers and Gov. Pat Quinn. Quinn, House Speaker Michael Madigan and others are in favor of the cost shift. Others, including state Senate Republican Leader Christine Radogno, are against the idea.
Radogno on Monday said it “should scare the daylights out of suburban property taxpayers” because it will shift millions of dollars in pension costs to local schools and could force massive cuts to education or property tax increases for suburban and downstate homeowners." Chicago property owners already pay for Chicago teachers’ pensions. “It makes sense for schools to have ‘skin in the game,’ but pension benefits are set by the Illinois General Assembly. To allow politicians in Springfield to set the benefits but send the bill to suburban property taxpayers is a recipe for disaster,” Radogno, of suburban Lemont, said Monday.
You can read Jayette's full report at: http://watchdog.org/60634/il-teachers-retirement-system-bleeding-out-experts-say/