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State TRS contribution to increase $550 million in FY22, which is $310 million more than projected

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Illinois

* I’d been meaning to get to this, but other stuff got in the way. From last week…

The Teachers’ Retirement System Board of Trustees has given preliminary approval to a $5.69 billion state contribution to the System for fiscal year 2022, a 10.7 percent increase over the current fiscal year’s government contribution of $5.14 billion.

Last year’s five-year forecast from the Governor’s Office of Management and Budget predicted the FY22 TRS contribution would be $5.38 billion. So, that’s an increase of $310 million above the projection and a $550 million overall increase. And it obviously comes at a time when the state can least afford it.

* COGFA’s October report hasn’t received much play…

Despite the pandemic and continued economic uncertainty it has caused, through the first one-third of FY 2021, base receipts are up $472 million. The growth reflects the surge in July income tax receipts related to the filing deadline extension. Through October, combined net income tax receipts are up by $1.545 billion. While net sales taxes are up only $54 million, that modest yet surprising gain serves to demonstrate the consumer’s recovery efforts from COVID- 19 driven economic disruptions.

All of the other revenue sources combined have declined a net $111 million, principally due to the one-time court settlement proceeds receipted last fiscal year. Overall transfers are off considerably, down $710 million, much lower reflecting the significantly lower Income Tax Refund transfer levels as well as other miscellaneous transfers. With another poor showing in October, federal sources are now down $306 million year to date.

To stress the point, income tax receipts for this fiscal year only appear higher because the April 15th deadline was extended until July.

* Back to TRS…

The Board also announced that due to the economic upheaval created by the COVID-19 pandemic, the final TRS investment return for FY 2020 was +0.55 percent, net of fees, on June 30. By comparison, on December 31, 2019, the half-way mark in FY 2020, the TRS rate of return was +13.41 percent.

“TRS has enough money on hand to pay all pensions for years into the future,” said TRS Acting Executive Director Stan Rupnik. “Yet, the System still carries a large long-term unfunded liability that leaves TRS vulnerable in an era of economic uncertainty caused by the coronavirus.”

The System’s unfunded liability increased by $2.6 billion during FY 2020 to a total of $80.7 billion. The total liability – all benefits owed to all TRS members for all time – increased by $4.1 billion to $135.6 billion.

Despite the growth of the unfunded liability in FY 2020, the funded status of TRS remained relatively stable at 40.5 percent; compared to 40.6 percent in FY 2019 and 40.7 percent in FY 2018.

posted by Rich Miller
Friday, Nov 6, 20 @ 1:38 pm

Comments

Paging Jim Durkin. Show us the money, Jim.

Comment by Precinct Captain Friday, Nov 6, 20 @ 1:43 pm
There goes the cannabis cash.

Comment by 47th Ward Friday, Nov 6, 20 @ 1:49 pm
47th, as Cheech and Chong said, “Up in Smoke!”

Comment by Six Degrees of Separation Friday, Nov 6, 20 @ 1:51 pm
This is a bipartisan disaster. Status quo is unacceptable.

Comment by Dan Johnson Friday, Nov 6, 20 @ 1:54 pm
If Pritzker wants to truly help Illinois with its fiscal mess - he would force changes at TRS as he now controls the Board. .5 returns is why the contribution exceeds what was expected

Comment by Sue Friday, Nov 6, 20 @ 2:15 pm
== Paging Jim Durkin. Show us the money, Jim.==

Paging Democrats. You have a supermajority. You bought the ticket, you get to take the ride.

Comment by Yeah Friday, Nov 6, 20 @ 2:16 pm
= If Pritzker wants to truly help Illinois with its fiscal mess - he would force changes at TRS as he now controls the Board. .5 returns is why the contribution exceeds what was expected =

Good observation. The other systems did far better. Maybe TRS should engage in more passive investments like index funds, at extremely low cost, instead of chasing return through exotic investments which are also illiquid and high cost.

Comment by cover Friday, Nov 6, 20 @ 2:19 pm
=== You have a supermajority. You bought the ticket, you get to take the ride.===

Which prison, facilities, universities do you want to close first,

Downstate, the taker, by miles and miles, should feel the deepest and first pain, starting in the 51st state counties.

We can do this all day, or adults can address the issues.

The GOP folks won’t want to do this, Raunerites don’t mind universities closed, prisons closed, DNR parks closed… they don’t vote “Democrat”, so start there.

Comment by Oswego Willy Friday, Nov 6, 20 @ 2:20 pm
Status quo is unacceptable.===

Pre-paying pensions is cheaper but becoming painful. We currently pay out about $12B annually to retirees in benefits, which rises a little every year. That is about a 2.5% tax rate. We might soon have to simply pay that as an annual cost until the boomers pass and Tier 2 retirees dominate. Of course, we have $90B in assets that might return $6B annually, so that might be reduced by half, which is far easier to pay. Or use that for economic stimulus such as free college tuition. That would keep people here.

Comment by Jibba Friday, Nov 6, 20 @ 2:21 pm
== Which prison, facilities, universities do you want to close first,

Downstate, the taker, by miles and miles, should feel the deepest and first pain, starting in the 51st state counties.==

I live in Chicago. I don’t give a hoot about downstate prisons. I just find it very funny that whenever the question is how to deal with Illinois’ horrendous fiscal problems arise, folks ask “well what are the super-minority Republicans going to do to solve this?” But on literally anything else it’s “F off Republicans, elections have consequences.”

Comment by Yeah Friday, Nov 6, 20 @ 2:29 pm
Willy - why do you keep asking those who have no power to cut anything what they would cut? It is Jay Bob’s job to make that decision. He owns the responsibility to lead us out of the fiscal crisis. Why don’t ask him?

Comment by Captain Obvious Friday, Nov 6, 20 @ 2:53 pm
=== Jay Bob===

Are you a toddler, c’mon, you can’t be an adult?

Pain is happening. Downstate Raunerites should feel massive pain in the districts, if it’s the Dems’ call.

Comment by Oswego Willy Friday, Nov 6, 20 @ 2:56 pm
==Downstate, the taker, by miles and miles==

Again, Cook County is full of takers. Chicago is full of taker neighborhoods.

Let’s just keep Lincoln Park, the North Shore, and DuPage County and call it a day?

Comment by City Zen Friday, Nov 6, 20 @ 2:59 pm
=== Let’s just keep Lincoln Park, the North Shore, and DuPage County and call it a day?===

… or save them as much as possible. Why not? That’s where the Dem votes are.

Close Eastern, close Carbondale dorms, starve SIUC of students, close a prison… good starts.

Cook and the collars, fewer Raunerites.

Comment by Oswego Willy Friday, Nov 6, 20 @ 3:03 pm
@CZ, I think you are ignoring quite a bit of math.

=.5 returns is why the contribution exceeds what was expected=

And it is an anomaly. How did you feel about the 13%? Historically TRS has out performed all of the other systems.

Comment by JS Mill Friday, Nov 6, 20 @ 3:05 pm
Close Western’s dorms, Macomb had folks who refused to fully fund higher ed… see, Dem areas, no cuts yet, and the savings…

They had plenty of “&$@# Pritzker” signs… “ok”

Comment by Oswego Willy Friday, Nov 6, 20 @ 3:05 pm
Looks like Oswego Willy is wanting to use the slash and burn technique to anything south of Chicago.

Comment by Cardinal Fan Friday, Nov 6, 20 @ 3:05 pm
=== Looks like Oswego Willy is wanting to use the slash and burn technique to anything south of Chicago.===

Statistically, they are takers. There must be waste, amirite?

Or… adults can get in a room… work the problem… bipartisanly

Comment by Oswego Willy Friday, Nov 6, 20 @ 3:07 pm
Let’s remember this…

=== - Oswego Willy - Thursday, Nov 5, 20 @ 12:01 pm

Enough “fun”
…

My mocking of the “anger”, well, that’s also “simple solutions are usually neither”. We need higher ed. We need Illinois strong “top to bottom”, east to west, but that only works… with everyone deciding Illinois deserves better, we need to find the way.

Those on either side who think a partisan political holdout or punishment take is smart and winning, real dollars, real programs, real people are going to see these cuts and it’s not numbers on a sheet of paper.

Pointed and precise cuts, real cuts, deep but directed cuts to help the state but hurt the least, yeah, everyone needs to get on board to discuss this, or be willing to sit out saving what you can because increasing revenues “is against my core”. Thing about that core is… core services to those most needy and most fragile in Illinois don’t have that luxury.===

Sometimes what I write… is for effect.

:)

Comment by Oswego Willy Friday, Nov 6, 20 @ 3:13 pm
=== Sometimes what I write… is for effect. ===

I totally understand and I agree that the adults need to enter the room; whether it is budget discussion or COVID discussion or any discussion for that matter.

Comment by Cardinal Fan Friday, Nov 6, 20 @ 3:18 pm
Sales tax receipts being up is a positive sign.

Comment by Murph Friday, Nov 6, 20 @ 3:21 pm
I’d argue Carbondale and SIU is one of the few downstate places that Dems would protect. That’s the lone Dem stronghold South of 64 and out of the Metro East. Sure they have no reps there because of the surrounding areas but deleting Carbondale would be pretty dumb.

Comment by Southern Illinois Infrastructure Friday, Nov 6, 20 @ 3:21 pm
=== I’d argue Carbondale and SIU is one of the few downstate places that Dems would protect. That’s the lone Dem stronghold South of 64 and out of the Metro East. Sure they have no reps there because of the surrounding areas but deleting Carbondale would be pretty dumb.===

Elections have consequences.

Wanna save SIU, SUIC and SIUE… get ALL sides to be adults… it’s not a threat, it’s math, and the politics of compromise might save us all.

Comment by Oswego Willy Friday, Nov 6, 20 @ 3:23 pm
Jibba that’s helpful. How much of that $12B is in IL? Most? Half? Pension income recaptures 5% of it.

Comment by Dan Johnson Friday, Nov 6, 20 @ 3:26 pm
Call me names Willy, but you didn’t really answer my question. Why aren’t you or anyone else asking our esteemed governor precisely which 15% HE will cut. Being snotty about the flop doesn’t cut it. He had no specific plan if the CA failed? Screams incompetence to me.

Comment by Captain Obvious Friday, Nov 6, 20 @ 4:01 pm
==Why aren’t you or anyone else asking our esteemed governor precisely which 15% HE will cut.==

You’re going to find that out soon enough. His budget will be introduced in February.

Comment by Demoralized Friday, Nov 6, 20 @ 4:05 pm
==You’re going to find that out soon enough. His budget will be introduced in February.==

I thought the first 5% (out of 15% total) was going to be out of the rest of the FY21 budget. Meaning decisions need to be made on those cuts as soon as possible.

Comment by Anonymous Friday, Nov 6, 20 @ 4:10 pm
=== but you didn’t really answer my question===

I was waiting if the toddler could use words. Apparently you can. Let’s look at your question(s)

=== Why aren’t you or anyone else asking our esteemed governor precisely which 15% HE will cut.===

Today, the governor was dealing with a global pandemic increase, while others are still wanting things in before times.

The 15% cuts, if the Republicans decide to shed Raunerite thoughts and work with the governor, he’ll show ALL of us what’s up.

As far as I can tell, no one is talking, discussing, or looking at those discussions.., and I can see YOUR anger… but why would any governor be ready hours after losing, arguably his best weapon to a budget. If it’s 15%, then we’ll know how serious the Republicans are, or veto season and beyond will be painful for those choosing not to be adults.

=== He had no specific plan if the CA failed?===

Are you in a hurry? Gotta a cab with a meter running outside?

===Screams incompetence to me.===

Screams… “as a governor, I take serious each dollar and program means hurting people or groups, I better talk to stakeholders”

Like I said… adult things.

Comment by Oswego Willy Friday, Nov 6, 20 @ 4:11 pm
I apologize if this has already been discussed on Capitol Fax, but what was the story behind the TRS upheaval concerning its former executive director and other staff member(s)?

Comment by Retired SURS Employee Friday, Nov 6, 20 @ 4:17 pm
===How much of that $12B is in IL?===

Would you believe that 53,180 or 61,005 active recipients of SERS are still in Illinois? According to FY2019 annual report. I’m sure the other state systems are similar. Only 1,872 in FL, the next highest state.

Comment by Six Degrees of Separation Friday, Nov 6, 20 @ 4:40 pm
Taxing pensions is a political nonstarter because you cannot tax state pensioners without taxing all pensions, including SS.

Comment by Jibba Friday, Nov 6, 20 @ 4:51 pm