The Telegraph | Teachers get lesson on retirement system
The Telegraph featured TUA’s release on pension millionaires within the Illinois Teachers’ Retirement System.
“We’re in an awful place; it is unfair for us to be where we are,” said TRS Executive Director Dick Ingram, who is holding such meetings throughout Illinois.
Ingram blamed the state for not fulfilling its obligations to fund the system, as well as Illinois using “political math” for calculating funding instead of “actuarial math,” which he said is more accurate.
Illinois is the 86th-largest pension system in the world, a TRS news release said. It serves 362,967 members, and had revenues of $10.5 billion and a payout of $4.5 billion last fiscal year. Ingram said the fund’s investments are bringing in 23.6 percent interest, with a 9.3 percent average return in previous years. The target return is 8.5 percent.
Ingram said the TRS has assets of $36 billion, but since 1970, the state cumulatively owes the fund $15 billion.
“This is the source of our problem, and the shortfall,” he said.
There is a long-term liability of $81 billion, and long-term unfunded liability of $44 billion.
The system provides retirement, disability and survivor benefits to teachers, administrators and other public school personnel outside the city of Chicago’s public school system. Those retirees, who pay into the system during their working years, do not get Social Security.
“You kept your part of the deal,” Ingram told the nearly full auditorium of mostly retirees. “Your benefits are not extravagant and are not the problem.”
Ingram said the TRS board passed “The New Reality” a few weeks ago (http://trs.illinois.gov/subsections/press/TRSBoardResolution.pdf) and summarized the following points on a screen:
– Use actuarial math, not Illinois pension “political science” math.
– Get funding guarantees from the state.
– Fix Tier II inequalities, which apply to employees making first payments after Jan. 1, 2011.
Ingram said the state’s “phony math” that it uses to determine how much it owes the fund has a target of 90 percent payout, is tied to debt service and has a 50-year funding plan, resulting in $2.7 billion due in fiscal year 2013.
If Illinois used actuarial math, he said the outcome would be $3.8 billion, based on a 100 percent target; not tied to debt service; and a 30-year amortization.
Regarding Tier II teachers and administrators, they must be 67 years old and have accumulated 10 years of service credits in order to qualify for full benefits. Tier II members may retire at age 62 with 10 years of service, but will receive retirement benefits reduced 6 percent for every year the member is under age 67.
Tier I employees can retire at 55, 60 or 62, depending on years of service and the amount of benefits to receive.
“One generation should not burden the next generation,” Ingram said.
He spoke for 45 minutes, then took questions.
What irritated some attendees was that the state TRS board does not advocate or suggest program changes to legislators.
“Our role is to provide them information,” Ingram said. “The board is not an advocate for or against policy.”
Instead, the contingent heard that teachers unions or the Illinois Retired Teachers Association were the advocacy groups. Alton School Board President Ed Gray, regional director of IRTA, urged the crowd to join the association.
“You want to get involved? Join at $2 per month,” Gray said. “We also have the IRTA PAC (political action committee) that is $1 per month. You need to ask yourself, ‘What are you doing?’ You need to join.”
One man expressed frustration that Ingram appeared to bring up possible scenario changes to the system in a newspaper article.
“I look for our director to protect our benefits,” the man said, not to bring up a menu for harmful changes.
Ingram accepted his criticism.
Last month, Gov. Pat Quinn pushed for the state to stop its contributions to the Teachers’ Retirement Insurance Program for retired teachers, administrators and community college employees’ health care, in order to save $90 million per year. Retirees now pay about 50 percent of their health care premiums, with school districts paying 14 percent and the federal government contributing 6 percent, leaving the state to pay 30 percent.
“This issue is far from settled,” Ingram said. “The governor didn’t think it through; they might think it through,” as many retired educators are not eligible yet for Medicare.
If the state did drop its contribution, it would affect more than 70,000 educators and their dependents, raising their health insurance premiums by 20 percent. On the community college side, it would affect 6,000 retirees, requiring them to pay about 25 percent more in premiums. They now pay about 25 percent of their health care premiums, with the state contributing 75 percent, with some of the money coming from workers’ payroll contributions.
On the other hand, Taxpayers United of America blames retired administrators for “sucking the lifeblood out of the TRS,” releasing a list Monday of the TRS Top 100 Teacher Pensions as of April 1. The top annual recipient, retired from suburban Chicago’s New Trier Township District, gets a yearly pension of $269,531 and so far has received $1,366,454, according to TUA’s list.
The highest total of pension money that one person has received is $2,754,060, a man who retired from Deerfield School District, according to the list.
No one on the list is from Southern Illinois.
In contrast, Ingram said the average educator’s pension is $46,452 in Illinois, and $37,719 in Madison County.