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Lawmaker says fully funded Illinois pensions ‘impossible’

By   /   December 31, 2012  /   News  /   7 Comments

NOT GONNA HAPPEN: State Sen. Pam Althoff says it’s “100 percent impossible” to fully fund Illinois state pensions.


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.

THE MAN WITH A PLAN: State Rep. Dan Biss says he has a plan that will fix Illinois’ public pension problems.

“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 [email protected]


Ben formerly served as staff reporter for Watchdog.org.

  • eatingdogfood

    Democratic Hustler Politicians + Corrupt Greedy Unions = BANKRUPTCY BABY!

  • Jason Gansauer

    States cannot declare bankruptcy + How do you like that?

  • Tough Love

    Jason, While that’s correct, they can (and many will) become “insolvent” and stop paying many bills …. the funding of Public Sector pension very likely being at the top of the list.

    I suggest you start working on a “plan B” for your retirement.

  • peter bergquist

    well the money is owed and must be paid….it is the unions right to recieve back due pay and cannot be taken away even is the state government fails…..and all the schools closed the money is still owed….this is america the usa and there are laws that have been broken…if we got rid of 90 percent of the admnistraots which we dont need and had three to ive districts in the whole state that would bring in billions of dollars a year….louis geistner from ibm could run the illinois system at a profit and hes not the only one who can its so simple…fire the administrotrs look at the track record..teach to the test makes our kids ignorant and linear…

  • peter bergquist

    the legislators in many states are worse than the old russian governmnet…we nedd hoonest politicians first….a good solid plan as i outline above an d that will be fine

  • peter bergquist

    recall Pam A. and everyone else that cant get the job done….and stop the state lotteries this instant…..theres millions and possibly billions that can help schools roads etc…..the federal governmant is being destroyed by anti taxers…spending at the federal level is at a 60 year relative low…and we still have a huge deficit because the tax rates and deductions for the many people have been cut by 75 percent… Its not spending thats out of line…receipts have dropped off a fiscal cliff already……….the the nly other time receipts were a lower percentage of the gross earnings was in 1929 almost 100 years ago… the federal government is not being funded at half the rate it was 12 years ago.

  • The Teacher’s Retirement Fund of Illinois has at least 36 billion dollars that Illinois scumbag legislators cannot touch. If Illinois paid back what it owes the fund, it would have 90 billion or so. Do you really think Illinois funds the pensions more than 20%? One more thing, Einstein: when a state cannot pay it bills it has a means of solving its problem. I’ll give you one guess what it is.