* Illinois Public Radio…
The Illinois Teachers’ Retirement System says it expects a lower return on its pension investments in the next year. That means the state will have to cover more of the cost of teacher pensions.
TRS says it’s still a good assumed rate of investment return at 7.5 percent. That falls in line with similar pension systems nationwide. But it’s not as profitable as 8-percent, which TRS had been using for the previous few years.
Before they were using 8 percent, they were using 8.5 percent.
* More context from the SJ-R…
Reducing the estimated rate of return brings TRS more in line with other major state and municipal pension systems. The National Association of State Retirement Administrators found 37 of 126 systems set a rate of return of 7 percent to 7.5 percent. Another 45 had a rate of 8 percent. The average return of those systems was 7.72 percent.
The average was 7.72 percent.
* Crain’s drills down…
To give a sense of TRS’ bigger obligations, it helps to consider that if the new 7.5 percent rate had been used to calculate the liability for fiscal 2013, it would have been $99.9 billion, not $93.9 billion, under the 8 percent rate. As a result, the pension’s unfunded liability would have been 60 percent, as opposed to 57.5 percent.
Lowering the rate also automatically increases the amount the state must contribute to the TRS fund, Mr. Urbanek noted. If the 2015 fiscal year contribution had been calculated using the new 7.5 percent rate, the budgeted $3.4 billion contribution would have had to be $500 million higher, he said.
That’s a huge budgetary hit. Huge.
This problem never ends.
* Speaking of the budget…
No state historic sites will close for now because of budget cuts, but many could see reduced hours after the Labor Day holiday.
“The governor’s office has given us some direction in how we will move forward with budget implementation,” said Amy Martin, director of the Illinois Historic Preservation Agency. “We will be looking to maintain services as best possible through the rest of this calendar year and hope the budget for IHPA will be restored in November or January.” […]
In addition to reducing hours, the agency will postpone filling vacancies until it sees if its budget will be restored. That will have an immediate effect on the Vachel Lindsay Home Historic Site in Springfield. The site superintendent is scheduled to retire July 1. After that, the home may be open by appointment only or for special events.