Wednesday, April 25, 2012
The Blunder that Just Keeps on Giving
“I am honored to have been selected to lead The Teachers’ Retirement System (TRS),” [the new executive director of TRS Dick Ingram said in January, 2011]. “My work thus far with the Board and the staff has made plain the many strengths of the System. I look forward to getting started and to learning something new every day as we continue to provide important services for teachers and their families across Illinois” (TRS).
According to TRS, “the Executive Director serves as the Secretary of the Board and the System’s chief executive officer and is responsible for the detailed day-to-day administration of the System. The Executive Director shall perform all duties prescribed by the Illinois Pension Code or by rule, order, or resolution of the Board. The Executive Director’s performance review is conducted annually.”
When Dave Madsen, Todd Mertz, John Dillon and I attended the “Fixing Illinois Public Pensions” forum, sponsored by the Better Government Association on April 9, Ty Fahner, president of the Civic Committee of the Commercial Club of Chicago, told the audience that Executive Director Dick Ingram had said that the “TRS pension system will be insolvent [by 2030].” Ingram also attended this meeting and raised no objections to Fahner’s comment.
On April 10, the Chicago Tribune printed this statement sent by Ingram to Voice of the People, “To be clear: Neither I nor Teachers’ Retirement System is proposing any changes in member benefits, especially a reduction in the current annual cost-of-living adjustment… It is not our role at TRS to suggest a solution to this problem…” Ingram then proceeded to say, “New revenues must be generated, and if they are not, benefits may have to be reduced… There are only a few options available and none is very pleasant to discuss – changes in the cost-of-living adjustment; in member contributions; in retirement age and in the benefit formula; as well as increased revenues through new taxes.”
On April 23, Merle Taber, John Dillon and I were invited to attend an editorial board meeting at the Chicago Tribune. One of several of the Board’s main substantiations of proof used for pension reform was Ingram’s statement regarding “TRS’ [inevitable] insolvency.” That same evening, on WTTW, Chicago Tonight, Fahner reiterated that “Ingram said, guess what? We’re going to go broke – that’s for the teachers, the IEA and IFT – in a very short period of time.”
(Incidentally, Fahner, “a rich white guy,” likes to also say that it’s not fair for the 95 percent who are not public sector union members to pay for the five percent. Perhaps Fahner should ask whether the 99 percent want to suffer even more cuts to education and health care funding and other essential services because of the one percent (the Civic Committee and other wealthy groups) that does not pay a fair share of taxes).
For Ingram to suggest unconstitutional alternatives for solving the state’s budget problems is to also not focus on the essential cause of the state’s deficit: revenue funding. Regardless of whether Ingram assumed a "worst-case scenario,” in other words, if the General Assembly “[did] not continue to provide all of the funding called for in state law,” he still provided endorsement of the Civic Committee’s (Illinois Is Broke) and the Chicago Tribune's exhortation for pension reform as the only solution for the state’s “budget mess.”
It is not one of the executive director’s duties to make self-contradictory statements that jeopardize the TRS members’ benefits and rights guaranteed by the Illinois Constitution. It is not “prescribed by the Illinois Pension Code” that the executive director’s role is to also validate a fallacious and illegal argument “where lawmakers [the Civic Committee and the Chicago Tribune also perpetuate] a [certain] solution.”
Surely, it wasn’t the March 30th resolution of the TRS board (of which the IEA president is a member) that may have incited Ingram to speak so irrationally?
Consider the Board of Trustees’ Resolution stated on March 30: “Having heard the report of the Executive Director describing the analysis performed by TRS staff and actuaries evaluating the State of Illinois’ ability to meet its existing future funding obligations, the Board of Trustees hereby resolves that the fiscal situation of the State has deteriorated to the point that the Board no longer has confidence that the State will be able to meet its existing funding obligations to TRS. As a result, the Board believes that action must be taken now to ensure the continued solvency and viability of the plan. This action must be based on the following principles:
“The impact of any proposal, and all future contributions to the plan, must be determined using generally-accepted actuarial principles and standards and not the funding scheme and pension bond limits currently in Illinois law. All future contributions must be guaranteed by statutory language substantially similar to that presented to the Governor’s pension assembly in February. Any changes to the Pension Code must first correct the existing inequities and funding flaws created with the enactment of Tier II and, any changes to the Pension Code must be based on the simplest and most straightforward changes possible.
“Further, the Board resolves that it will only certify future contributions that are calculated based on generally accepted actuarial principles and standards. The Board further resolves to continue to commit the time and expertise of its staff and actuaries as necessary to ensure the accurate analysis of any and all proposals for changes to the Pension Code. Passed Unanimously” (TRS).
Also read “Message from Cinda Klickna, president of the IEA” (April 12): http://teacherpoetmusicianglenbrown.blogspot.com/2012/04/message-from-cinda-klickna-president-of.html
“Poisoning the Pension Well: TRS Executive Director Dick Ingram’s Shift in Position” (April 2): http://teacherpoetmusicianglenbrown.blogspot.com/2012/04/poisoning-pension-well-trs-executive.html
“Insolvency by Cinda Klickna, IEA President” (March 31): http://teacherpoetmusicianglenbrown.blogspot.com/2012/03/statement-regarding-pension-solvency.html
“Insolvency by Bob Lyons, TRS Board” (March 31): http://teacherpoetmusicianglenbrown.blogspot.com/2012/03/insolvency-by-bob-lyons-trs-board.html
“TRS Executive Director Richard Ingram’s Address to Delegates at the IEA Representative Assembly” (March 27): http://teacherpoetmusicianglenbrown.blogspot.com/2012/03/trs-executive-director-richard-ingrams.html