“Our
pension system received a total state pension contribution of $4.81 billion for
this current fiscal year, which is certainly a lot of money. Even more
significant is that it is not a number that was arrived at by using what is
called standard actuarial accounting.
“The
contribution that we receive is based on state law, Illinois state law.
Illinois state law dictates that pension contributions are to be calculated on
a fifty-year timetable that began in 1995, not the thirty-year time table that
almost every other pension system uses.
“State
law also established a 90 percent funding target instead of the standard 100
percent goal that practically all other pension systems dictate. And lastly,
Illinois requires the debt payments on state pension bonds to be deducted from
future state contributions. That means, the billions borrowed by Governors
Blagojevich and Quinn are repaid by money that should have been received by the
TRS pension fund.
“As
a result, the contribution of $5.14 billion which is what the Illinois
Teachers’ Retirement System will receive for FY 2021 is not the amount that an
actuarial standard study would call for, nor does it equal what the pension
system is expected to spend in the year ahead. It does not in any way reduce
the existing unfunded pension liability that is currently $78.2 billion. It
will of course add to it.
“An
actuary using standard accounting practice would call for a contribution $3.2
billion higher than $5.14 billion, a required contribution of $8.34 billion.
And if the State of Illinois took ‘the long view’ and wanted to save money in
the long run, that is what they would pay.
“But
they certainly could not pay that amount because they do not have the $8.34
billion. If truth be told, they do not have the $5.14 billion. The only way
they will come up with the ‘by-law contribution’ will be by borrowing a goodly
portion of it.
“A
loan that will be paid for from future contributions. There is an old adage
that goes, ‘If you find yourself in hole, the very first thing you should do is
stop digging.’ Sadly, when you have been digging the hole for 81 years that is
all that you know.
“The
Illinois Senate Bill 264 FY 21 appropriations budget passed both houses of the
General Assembly this past weekend. Every Democrat attending the session voted
yes and every Republican voted no.
“The
general revenue spending called for in the FY 2021 is a record $42.9 billion
and has $8.6 billion in pension contributions to the three pension boards and
the five separate pension funds with an additional $1.3 billion for retiree
health costs and a $800 million payment for past pension bonds. As has been
reported, the full state payment for TRIP/TRAIL is in the new budget” -Bob
Lyons, former TRS Trustee and retired teacher
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