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* Shaw Media…
The Teachers’ Retirement System of the State of Illinois announced Friday it had given preliminary approval to a contribution request for $4.56 billion to its pension fund.
The changes in state law made last year for determining actuaries’ estimates for adequately funding pensions have greatly increased the amount of contributions statewide.
The Teacher’s Retirement System said of the projected $4.56 billion contribution, just $974 million is needed to pay the cost of pensions for that year. The remaining $3.5 billion is to go toward the amount owed from previous years.
“Most of the fiscal year 2018 contribution is a self-inflicted wound,” TRS Executive Director Dick Ingram said. “That money could be spent on other priorities today if the state of Illinois had fully met its obligations in the past.”
While next year’s contribution to the teachers’ pensions is an eye-popping figure, it is far short of the actuaries’ ceiling. Using the new accounting standards, the state’s annual contribution should be $6.88 billion to catch up with its unfunded liability.
posted by Rich Miller
Monday, Oct 31, 16 @ 10:15 am
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where is that 4.56B contribution going to come from?
Comment by Bothanspied Monday, Oct 31, 16 @ 10:19 am
== where is that 4.56B contribution going to come from? ==
Primarily GRF …
Comment by RNUG Monday, Oct 31, 16 @ 10:31 am
And we keep electing the same people to office who oversee our spending.
WE deserve this.
Comment by allknowingmasterofracoondom Monday, Oct 31, 16 @ 10:51 am
In the pension discussion, the focus is on State workers, but I think that teachers are the bulk of the pension costs.Better to take money from a faceless bureaucrat than your first grade teacher.
Comment by Last Bull Moose Monday, Oct 31, 16 @ 10:52 am
But, but …we were told if only we legalized casinos, we’d never have to worry about School funding again? Were they fibbing to us 25 years ago?
Comment by yeah Monday, Oct 31, 16 @ 10:55 am
Yeah. Silly you. Didnt you mean the lottery?
Comment by Blue dog dem Monday, Oct 31, 16 @ 11:06 am
=But, but …we were told if only we legalized casinos, we’d never have to worry about School funding again? Were they fibbing to us 25 years ago?=
The next time a politician talks about a new funding source just ask them if they know the difference between supplement and supplant.
The lottery is an early example of supplant.
Comment by JS Mill Monday, Oct 31, 16 @ 11:25 am
“That money could be spent on other priorities today if the state of Illinois had fully met its obligations in the past.”
Makes it sound like all we needed back then was an “Easy” button.
Comment by City Zen Monday, Oct 31, 16 @ 11:40 am
== In the pension discussion, the focus is on State workers, but I think that teachers are the bulk of the pension costs.Better to take money from a faceless bureaucrat than your first grade teacher.==
Yes, they are.
TRS alone is by far the biggest, SURS (more teachers) is next, closely followed by SERS (what most people think of as State employees), then GARS (that is just about a rounding error), and finally JRS (that is so small by comparison it isn’t even a rounding error).
Comment by RNUG Monday, Oct 31, 16 @ 11:46 am
“Most of the fiscal year 2018 contribution is a self-inflicted wound,” TRS Executive Director Dick Ingram said. “That money could be spent on other priorities today if the state of Illinois had fully met its obligations in the past.”
The money was spent on “other priorities” for the last 40+ years. Tthus this mess today.
Comment by Federalist Monday, Oct 31, 16 @ 12:05 pm
+++ “Most of the fiscal year 2018 contribution is a self-inflicted wound,” TRS Executive Director Dick Ingram said. “That money could be spent on other priorities today if the state of Illinois had fully met its obligations in the past.” +++
And thus, most of the problem would not be fixed by amending the Constitution or eliminating pensions for future hires. Most of the problem is, in effect, irresponsible past stealth borrowing.
Comment by titan Monday, Oct 31, 16 @ 12:25 pm
Sounds like a default is in our future.
Comment by Ron Monday, Oct 31, 16 @ 1:30 pm
==The Teacher’s Retirement System said of the projected $4.56 billion contribution, just $974 million is needed to pay the cost of pensions for that year. ==
People who look at the $100+ billion unfunded pension liability and say “defined benefit plans are not sustainable” should look at these numbers and and realize that the truth is that “Running up a credit card bill is not sustainable.” The normal costs of staying current with the pension are only a tiny portion of the mess. And, as others have noted, the majority of the mess is for downstate teachers, not for executive branch employees. University employees are another big chunk of it.
Comment by Anonymous Monday, Oct 31, 16 @ 1:30 pm
=Sounds like a default is in our future.=
No Ron, it sounds like your taxes are going up.
Thank you for your contribution!
Comment by JS Mill Monday, Oct 31, 16 @ 2:24 pm
= And, as others have noted, the majority of the mess is for downstate teachers=
Uh, no.
Suburban teachers out number those considered “downstate” and all of them outside of CPS (whose pension is suffering the same issues) are in TRS.
Comment by JS Mill Monday, Oct 31, 16 @ 2:25 pm
The credit card company has said no more late/minimal payments. You now owe X. Pay up. What we owe the workers who have done the work and contributed toward their pensions (and now are due them) may be painful but not their creation. We all need to pay rather than be deadbeats like the state.
Comment by Anonymous Monday, Oct 31, 16 @ 2:32 pm
“That money could be spent on other priorities today if the state of Illinois had fully met its obligations in the past.”
That’ s because the collective “we” chose other priorities in the past.
Comment by Shemp Monday, Oct 31, 16 @ 2:41 pm
“No Ron, it sounds like your taxes are going up.
Thank you for your contribution!”
It could get exciting when the boys and girls in Springfield tell us they are raising our taxes to pay for pension benefits and not for new services.
Comment by CapnCrunch Monday, Oct 31, 16 @ 4:37 pm
Capn
Are you suggesting the state stiff workers out of their already paid (by them) retirement income?
Comment by Anonymous Monday, Oct 31, 16 @ 5:10 pm
@Capn- “exciting” is an understatement.
What I am interested to find out is if anyone will propose an increase and who or whom that might be.
I suggest Rock Paper Scissors to decide.
Comment by JS Mill Monday, Oct 31, 16 @ 5:26 pm
@Capn
==It could get exciting when the boys and girls in Springfield tell us they are raising our taxes to pay for pension benefits and not for new services.==
The statement you predict will certainly happen, even though it is inaccurate and deceptive(as usual).
The truth is the boys and girls in Springfield will be raising our taxes to pay for past debt they created, and not for new services.
I wouldn’t expect the truth from a politician when it is so much easier for them to blame the “usual suspects”.
Comment by Back to Reality Monday, Oct 31, 16 @ 5:52 pm
“The truth is the boys and girls in Springfield will be raising our taxes to pay for past debt they created, and not for new services.”
You can say a tax increase is needed to pay back debt or even pay for chopped liver but the reality is that it is needed to guarantee future pension benefits.
Comment by CapnCrunch Monday, Oct 31, 16 @ 7:00 pm
Um, hello. The debt is the debt to pension funds for all that wasn’t put into them and the interest accrued on that debt. Please keep up.
Comment by Anonymous Monday, Oct 31, 16 @ 7:54 pm
@Capn,
Are you trying to imply that we only need to pay our debts if we borrow money from certain people?
I guess I’m confused. I always thought that money was fungible. Opportunity costs of not paying into pension funds when due (and spending the money on other things) include the fact that we still owe the debt and may have to forgo other choices in the future to pay it.
The GA is not paying to “guarantee” future payments, they are paying back a portion of the money (remuneration plus interest) already earned by and owed to teachers that was never paid.
That money was supposed to be deposited in the pension fund. Instead, it was “borrowed” and spent on other things. It is still owed.
T.R.S. presently pays pensions, not the General Assembly. No “guarantee” of pension payments by the state ever requires a payment to the pension fund, only payment to pensioners.
That so called “guarantee” only goes into effect if T.R.S. becomes insolvent.
Since T.R.S. presently has more than 40 Billion dollars in assets, (and pays out about 4.5 billion in pension payments per year), I think they are not likely to become insolvent soon.
Comment by Back to Reality Monday, Oct 31, 16 @ 9:00 pm
==What we owe the workers who have done the work and contributed toward their pensions (and now are due them) may be painful but not their creation. ==
==That money was supposed to be deposited in the pension fund. Instead, it was “borrowed” and spent on other things. ==
Like employee salaries, raises, health benefits, promotions, job openings, pension spikes. This list goes on and on. All funded with money that wouldn’t have been there if we made those pension contributions.
Even TRS qualifies. Could a school district have afforded that 4% COLA raise in a contract if the state had to cut 30% of its funding to that district to make pension payments? Maybe that raise would’ve been 2%. Or no pension pick-up. Or more expensive health benefits. Pick and chose a career’s worth of salary adjustments downward.
The pension debt is owed. The courts say as such. That doesn’t mean you have to blind to the game.
Comment by City Zen Monday, Oct 31, 16 @ 9:46 pm
=Could a school district have afforded that 4% COLA raise in a contract if the state had to cut 30% of its funding to that district to make pension payments? Maybe that raise would’ve been 2%. Or no pension pick-up. Or more expensive health benefits. Pick and chose a career’s worth of salary adjustments downward.=
Your example/supposition is poor. The costs of funding the pensions properly for the past 90 plus years would have been minimal in comparison to the current debt. We now have to pay a bill that includes decades of penalties and added interest.
Comment by JS Mill Tuesday, Nov 1, 16 @ 8:30 am
==Your example/supposition is poor.==
Actually, it’s spot on. If we didn’t have the money to pay the full ARC all these years, where would it have come from? Exactly where I stated. And those suggested full ARC payments weren’t really “full” because it used extremely high interest rate assumptions, as the recent accounting rule changes for pensions have shown.
Comment by City Zen Tuesday, Nov 1, 16 @ 9:03 am
@Cityzen
Your scenario only works if state revenue is the only money available to pay salary and benefits. In many districts State revenue does not affect much because that contribution to the school budget small to begin with.
The answer to your question is yes. They could and did afford it.
Comment by Back from Reality Tuesday, Nov 1, 16 @ 9:39 am
=Your scenario only works if state revenue is the only money available to pay salary and benefits. In many districts State revenue does not affect much because that contribution to the school budget small to begin with. In many districts State revenue does not affect much because that contribution to the school budget small to begin with.==
I never said it was the only component. Your assumption is when state funding goes down, property taxes goes up. There is no rule it has to happen that way, and certainly not decade after decade.
Your argument is basically that absolutely zero would have changed about someone’s compensation over 3 decades with less revenue for operating expenses (salaries). Seems highly unlikely.
Comment by City Zen Tuesday, Nov 1, 16 @ 12:21 pm
@Cityzen
I do not mean to give the impression that I think that zero would change in compensation. I do believe you overstate the impact of these hypothetical cuts in state funding.
You may not say it, but the reductions in salary and benefits you forecast as an outcome of paying pension contributions on time only happen if funding reductions actually impact the school budget.
Many schools do not receive much funding from the state. They are not dependent on the state as a primary revenue source.
If local tax levies already carry the burden of funding those salaries and benefits, and federal funds are unaffected, no reduction of the budget has actually occurred. Local levies would stay the same.
A cut in revenue never given to you in the first place doesn’t affect you. I think you may overestimate how much of the cost of local schools state revenue pays for.
I respectfully disagree with your assertion that salary and benefits would automatically be reduced because state funding paid pension costs. I think more would have to happen.
Comment by Back from Reality Tuesday, Nov 1, 16 @ 12:58 pm