Credit: chrisdlugosz / Flickr.com -- Creative Commons License Lawmaker says fully funded Illinois pensions ‘impossible’By Benjamin Yount | Illinois Watchdog SPRINGFIELD — Illinois has not paid what it owes its five pensions systems, and it’s unlikely lawmakers will want to pay any more than they have to in the future. “One-hundred-percent funding is impossible,” said state Sen. Pam Althoff, R-Crystal Lake. “As much as anyone would like to fully fund the pension systems, it is just not practical and impossible to implement.” A new report from the Illinois Auditor General’s office suggests lawmakers fully fund two of the state’s five pension systems — the Teachers’ Retirement System, the State Universities Retirement System. The report suggests leaving the State Employees Retirement System, the General Assembly Retirement System and the Judges’ Retirement system with a target of 90 percent funded. While the audit report released Monday simply suggests fixes to the beleaguered pension systems, the Illinois Auditor General cannot compel lawmakers to take action. State law calls for 90 percent funding for all five systems by 2045, but the auditor general’s report suggests 100 percent funding within 30 years for TRS and SURS. To fully fund the pension systems by 2032, Illinois lawmakers would have to spend more money, and more quickly, than they were planning, though no one knows for sure how much money would be needed. Althoff, however, said Illinois has many other needs than just paying the retirement costs of public employees. “We have less and less money and more and more demands to spend what little we have left,” Althoff said. Dave Urbanek, spokesman for TRS , said the managers of the teachers’ pension system have pushed for 100 percent funding in the past, only to be ignored by lawmakers. “We have to follow state law, and right now the law says 90 percent funded by 2045,” Urbanek said. “Our trustees have asked several times to be more like the actuarial tables used by the rest of the world.” State Rep. Dan Biss, D-Evanston, said he has a pension reform proposal that includes a move to fully fund the pension systems, but he admits it would be an expensive undertaking. “There is no specific number, it is a real cost,” Biss said Monday. “Fully funding the pension systems will not be affordable without the benefit reforms in our plan.” Biss and fellow Democratic state Rep Elaine Nekrtiz from Northbrooke have authored a plan that would lower cost-of-living increases, raise the retirement age and require public employees or local school districts to pay more into the pension funds. “I have been surprised how little the cost of moving to a fully funded (pension system) really is,” Biss said. Lawmakers are expected to discuss Biss’ plan in January’s lame duck session, but there is no guarantee that the Illinois General Assembly will vote. The Senate returns to session on Wednesday, and the House reconvenes Jan. 6. The auditor general’s pension report also looks at Illinois’ assumed rate of return on the investments for the five pension systems, saying all five are “reasonable” for now. But, the report suggests each pension system lower their expected rates of return in the future. Urbanek with the Teachers’ Retirement System said they are already within the auditor’s target range of between 7.75 percent and 8.25 percent. “We are at 8 percent,” Urbanek said, “down from 8.5 percent earlier this year.” Last year, TRS’ investments netted a return of just 0.76 percent. The year before, Urbanek is quick to point out, the rate of return was 23.6 percent. Frank Keegan, senior editor at State Budget Solutions, said that’s a problem. “The assumed rates of return would require there never be another recession and that the market never see another downturn.” Contact Benjamin Yount at Ben.Yount@FranklinCenterHQ.org |
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