The bad news is that the five Illinois pension systems are looking for $5.7 Billion in 2013. That leaves them half of a billion short of what they are seeking in required contributions to keep up. It is not a secret that Illinois TRS (and the other five Illinois pensions) are heavily underfunded. It is great to see the state stepping up to the plate in terms of committing to a large contribution, but it is still short of what the pension actuaries project is needed.
Clearly a large contribution is an upgrade over what Illinois has put into the system for many years over the past few decades, but if the contribution is still short of the target, the fund is in risk of falling further below the underfunded threshold. Of course, the systems themselves are on track to pay their full actuarial contribution obligations. Then again, the systems (and to a much greater extend, the employees within the system) were never the ones who had a problem paying their fair share.
Here is what Governor Quinn had to say:
“The truth is that over the past 35 years, too many governors and members of the General Assembly have clung to budget fantasies rather than confronting hard realities, especially with respect to pension…investments…Today, our rendezvous with reality has arrived. We must navigate our budget out of past decades of poor fiscal management…We must also stabilize and strengthen our public pension systems once and for all…to prevent them from swallowing up our core programs in education, health care and public safety and to ensure that we can pay all our bills.”
This sort of financial responsibility and realism from our state would have been nice in the past. Unfortunately, we can’t change that or live there and have to deal with the reality of today. And it looks like we’re heading towards a solution that we’re all going to have to pay for together. I wouldn’t be surprised to see a compromise that consists of: higher property taxes, higher state income tax, higher retirement age for state employees, worse cost of living adjustment benefits for state employees, and budget cuts from other state programs. The cuts will probably come from all over the state’s budget but will probably have slight disproportionately greater cuts from education.
That is where we stand on Illinois TRS as of now.