* The vote was unanimous, according to Greg Hinz…
The huge Illinois Teachers’ Retirement System announced Executive Director Richard Ingram resigned Aug. 3, three days after the TRS board placed him on administrative leave “due to performance issues covered by his employment contract.”. […]
According to the agency’s last annual financial report, it concluded fiscal 2019 on June 30, 2019, with $53.3 billion in assets but $134.4 billion liabilities, leaving it with a funded ratio of just 40.6 percent.
In a preface to the report, Ingram openly discussed the possibility that TRS could go “insolvent,” a development he blamed on consistent underfunding by state government. The same report, however, disclosed TRS’ return on assets in fiscal 2019 plummeted from $4 billion to $2.6 billion.
Pritzker aides did not immediately return calls for comment, but sources familiar with TRS tell me there were disputes over investment philosophy and how low to set the fund’s assumed rate of return. Setting that figure lower would force the state to contribute more each year now, something that would pull money from other, arguably more politically popular funding programs.
*** UPDATE 1 *** Greg’s story has been updated…
An investigation by led by former U.S. Attorney Zachary Fardon has led to the ouster of the head of the state’s largest government pension plan.
The huge Illinois Teachers’ Retirement System confirmed this afternoon that Executive Director Richard Ingram resigned after the board received results of a review into “performance-based issues” from Chicago law firm King & Spalding, where Fardon is now a partner in the firm’s government investigations practice.
*** UPDATE 2 *** Bruce Rushton…
Ingram’s resignation comes after the recent termination of Jana Bergschneider, the board’s chief financial officer. Bergschneider was paid $191,300 last year, according to Illinois comptroller records. Ingram was paid $303,000 per year, according to the comptroller.
David Urbanek, TRS spokesman, said that he could not give details surrounding the departures of Bergschneider and Ingram, saying that they are personnel matters. Devon Bruce, board chairman did not respond to an emailed request for an interview. After Illinois Times asked to speak with Bruce, Urbanek told the paper that the board chairman is not giving interviews.
“However, I have been authorized to provide the media with one addition piece of information: The Board’s unanimous vote came after an investigation of issues relating to Mr. Ingram’s contract conducted by the Chicago law firm of King and Spalding,” Urbanek wrote. “Leading the investigation for King and Spalding was its managing partner, Zachary Fardon, the former U.S. attorney for the Northern District of Illinois.”
Asked whether the investigation found any evidence of criminal conduct or whether any law enforcement agency has been contacted, Urbanek wrote in an email that he had no comment.
- Fav human - Thursday, Aug 6, 20 @ 2:19 pm:
In today’s almost zero interest rate environment,it’s going to be increasingly unavoidable to lower those assumed rates.
Or you’ll see funds taking more stock market risk than they should with the consequent damage when stock market eventually goes down.
- Six Degrees of Separation - Thursday, Aug 6, 20 @ 2:28 pm:
Fav -
The average annualized total return for the S&P 500 index over the past 90 years is 9.8 percent. Maybe a blind-folded dart thrower would be just as good for the SRS’s as an investment “professional”.
- City Zen - Thursday, Aug 6, 20 @ 2:38 pm:
==The average annualized total return for the S&P 500 index over the past 90 years is 9.8 percent.==
Risk.
How much risk, relative to all other market factors, do the pension systems have to take today to reach those historical rates of return of yesteryear? A whole lot.
- 1st Ward - Thursday, Aug 6, 20 @ 2:51 pm:
“The average annualized total return for the S&P 500 index over the past 90 years is 9.8 percent”
The past 20 years has been 5.9%, lower than targeted returns. The S&P also has significant risk with a lot of cyclical industries which are not doing well currently.
- Rural Survivor - Thursday, Aug 6, 20 @ 2:55 pm:
Low interest rates are the main driver of pension payments. Pensions can’t assume risk like an individual investor can. Governments owe so much debt at all levels. Raising interest rates will make government failures more likely. Fed will keep rates low as long as they can. Pension liabilities are soaring in private businesses too. More 401k. Defined contributions.
- don the legend - Thursday, Aug 6, 20 @ 3:17 pm:
Pretty sure the ouster wasn’t related to fund performance but to his personal performance. Folks who work there say hiring shenanigans.
- Fly like an eagle - Thursday, Aug 6, 20 @ 3:48 pm:
== The past 20 years has been 5.9%, lower than targeted returns.==
Because in 2008 the S and P dropped 38.49%.
- Dr. Pepper - Thursday, Aug 6, 20 @ 3:57 pm:
I wonder what Arthur Andersen would say.
- 1st Ward - Thursday, Aug 6, 20 @ 3:59 pm:
“Because in 2008 the S and P dropped 38.49%”
And the following 10 years was the biggest bull market in history. What’s your point?
- Back to the Future - Thursday, Aug 6, 20 @ 3:59 pm:
This story is developing some interesting twists and turns. These folks have control of a lot of money and are clearly having problems.
- Oswego Willy - Thursday, Aug 6, 20 @ 4:05 pm:
=== I wonder what Arthur Andersen would say.===
Another I miss every day and wonder to what he would think. That and his sometimes cringy humor.
……….
Usually being the former USA of Northern Illinois means you investigated possible corruptible folks, not evolve to maybe become one themselves.
Usually.
- Fly like an eagle - Thursday, Aug 6, 20 @ 4:10 pm:
==What’s your point? ==
The huge dropped skewed the S and P numbers. It was a twentieth of the total not one 90th of the total. That’s why the S and P is only 5.9% in the last 20 years. A larger sample (years) gives you a better picture.
- 1st Ward - Thursday, Aug 6, 20 @ 4:31 pm:
“The huge dropped skewed the S and P numbers”
What about the outside gain over the next 10 years which was the best in history? S&P recovered recovered its losses by March 2013 and hasn’t looked back since.
“A larger sample (years) gives you a better picture”
20 years is a large sample given the changes in era; too large of a sample size leads to bias. Why compare S&P returns of pre-tech age to now. Seems irrelevant.
- Roundsquare - Thursday, Aug 6, 20 @ 4:52 pm:
The last two EDs of TRS get pushed out. Good luck finding someone to run it now.
- Rich Miller - Thursday, Aug 6, 20 @ 5:20 pm:
=== Good luck finding someone to run it now===
LOL
$300+K a year, full staff, lots of perks. Who would EVER want that job??? lolol
- Rich Miller - Thursday, Aug 6, 20 @ 5:20 pm:
…Still laughing
- Boxcar Willie - Thursday, Aug 6, 20 @ 6:53 pm:
And the plot thickens…The Chief Technology Officer, Jay Singh, was also fired just before the CFO was fired. Sounds like criminal charges should be filed.
- Anonymous - Thursday, Aug 6, 20 @ 8:02 pm:
Exchange Traded Funds (ETF’s) of major indexes are simple to manage, buy and sell. Many minor ETF variants allow high-value transactions in real-time. S&
- Desert Rat - Thursday, Aug 6, 20 @ 10:49 pm:
$300K for ED, $191K for CFO, and then hundreds of millions each year for investment management and advice (good years and bad). It’s a gravy train. Look up the 2017 Pennsylvania pension study.
- 44th - Friday, Aug 7, 20 @ 8:36 am:
CALPERS head also just quit. Not so easy to invest these pensions in a zero interest rate environment. Not sure what happened here, CTO, CFO as well. Probably a technology contract conflict or something.