SPRINGFIELD, IL -- All Teachers’ Retirement System pensions and benefits will be paid in November on time and for the foreseeable future, despite an announcement today that cash flow constraints will delay the payment of state government’s November contribution to TRS.
“All TRS pensions and benefits are funded exclusively from the TRS trust fund and not from the state budget,” said TRS Executive Director Dick Ingram. “TRS currently has $46 billion in the trust fund to pay all pensions and benefits and monthly benefit payments total approximately $460 million.”
State Comptroller Leslie Geissler Munger said today that because her office will not have enough cash on hand to meet all of state government’s bills in November, the state’s November payment to all Illinois pension systems will be delayed. The November payment to all of the state pension systems is approximately $560 million. The TS portion of that payment is approximately $312 million.
In fiscal year 2016, state government appropriated $3.7 billion to TRS as its annual contribution to the retirement systems. Normally, that contribution is split up into 12 monthly installments. This year, each of those installments is about $312 million.
Comptroller Munger indicated that even though the November installment of the state’s contribution to TRS will be delayed, she is confident that TRS will receive the entire $3.7 billion annual contribution by the end of the fiscal year in June.
“We have been working very closely with the comptroller’s staff and we understand completely the extremely difficult position her office is dealing with,” Ingram added. “Comptroller Munger and her staff have been extremely responsive and helpful to TRS.”
About Teachers’ Retirement System:
The Teachers’ Retirement System of the State of Illinois is the 23rd largest public pension system in the United States, and provides retirement, disability and survivor benefits to teachers, administrators and other public school personnel employed outside of Chicago. The System serves 395,000 members and had assets of $46 billion as of June 30, 2015.
Dear Mr. Urbanek,
Thank you for your note indicating that annuitants will be paid their pensions regardless of the shortages the state now faces by the TRS funds.
I also understand the promise/hope that the Comptroller will make restitution to the TRS by June. And I comprehend the comptroller's difficult position given the budget impasse.
Will there be an interest rate applied to the state's later funding of the TRS payment due to the budget impasse? If so, what rate might that be? If not, is this due to some arrangement on the part of the TRS and the Office of the Comptroller?
Thank you for any information.
Illinois Skipping November Pension Payment:
“Illinois is so short on cash without a balanced budget in place that it won’t make its $560 million monthly pension fund payment next month and could also skip its December payment, state Comptroller Leslie Geissler Munger announced Wednesday. ‘The consequences of inaction are severe and they grow more dire’ every day without a budget for the fiscal year that began July 1, Munger warned.
“Munger stressed that her intention is to make up any missed pension payments before the close of fiscal 2016 on June 30, but said that will drive up the state’s bill backlog. The backlog of unpaid bills currently stands at $6.9 billion, up from $6 billion last month, and is on pace to hit $8.5 billion by the end of the calendar year, Munger said at Wednesday’s news conference.
“The state is carrying $111 billion of unfunded obligations in its five pension funds and lengthy payment delays will only worsen the funds’ condition. The state’s monthly payments through the fiscal year remain at the $560 million level. ‘This decision came down to choosing the least of a number of bad options and it saddens me that we've reached this point. But the fact is that our state simply does not have the revenue to meet its obligations,’ Munger said. ‘We will use every available dollar in the higher revenue months this spring to catch up with our commitments and ensure that our retirement systems are paid in full…’
“‘We had to pick something,’ Munger said. Retirees will continue to receive their annuity checks, she stressed… ‘State government is not serving anyone well right now,’ she added. ‘It is incumbent on the General Assembly and governor to lock arms and pass an agreement that will allow Illinois to regain its fiscal footing…’”
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“…When Comptroller Munger fails to make the state’s $560 million payment in November, that is money that cannot be invested or bring a return. With no budget agreement there will be another missed payment to TRS in December. These are dollars lost on investments that are lost forever, even after the missing payments are made up. If they are made up.
“Why is there no budget agreement? Because Governor Rauner will only agree to a budget if the legislature votes to include his union-busting turnaround agenda. Without a budget, only those programs that are federally mandated or court ordered will be paid.
“And first in line ahead of even those payouts are the banks that hold bonds, the state’s debt. Because state debt is a profit center for Rauner’s friends on Wall Street. Some have called on the Democrats and Rauner to compromise, meaning that the Democrats would agree to some of the union-busting demands of Governor Rauner...”(Fred Klonsky).