A leaked memo by TRS Executive Director Richard Ingram has caused a flood of concerned emails into my inbox this weekend.
Ingram is predicting insolvency for the teacher pension by 2029.
And what is scaring retirees is his threat that reduced benefits to retirees was a likely solution.
First of all, Ingram seems to view things a little too much as a benefit problem and not a funding problem.
When he spoke to the IEA RA a few weeks back, I believe he was called out for this.
Changing pension benefits for already retired employees has not been embraced even by House Republicans, whose leader, Rep. Tom Cross of Oswego, has pushed strongly to reduce benefits for people who are on the job now but not yet retired.
But in an interview Friday, Ingram said the state might have to target cost-of-living pension increases for retirees. Retirees now receive automatic COLA increases of 3 percent annually, which is compounded.
“What we’re saying is that the number is so bad is that you have to start having those conversations,” Ingram said. “The reality is that if you look at the pension math, the single biggest cost is the COLA.
“I’m really stuck. I have to say that the math is not trueing up with what is constitutional or fair or earned or whatever else.”
Cross praised Ingram’s shift in position, but still declined to endorse changes in the benefits of already-retired members.
Some responses to the stir caused by Ingram?
In the recent TRS meeting, Ingram told the board that, “The evidence has mounted to the point that it is prudent to assume that we will not be funded at the levels provided in statute. Leading members of the General Assembly have all but said as much, and in the final analysis that is what really matters.”
The TRS actuaries have run figures that show decreases in State funding could lead to insolvency. These are realities that the TRS Board feels must be shared with members and discussed with legislators. IEA will continue in our ongoing efforts to find solutions.
Ingram’s point is that the pension issue needs to be addressed. Continuing to underfund the pension systems is not acceptable.
In my view, the best resource around is Glen Brown’s blog.
As a young man, I was taught to “pay my debts” and to “keep promises” that I made to others. I was taught to “face the consequences” of my actions. I was taught to “work hard” and “never give up.” Both of my parents never finished high school because they needed to find jobs to support themselves. They were uneducated, but they knew a lot about instilling responsibility, integrity, courage, discipline, and perseverance. I wish these values were evident in our Illinois policymakers today: to work hard to find the ethical solution for funding the public pension systems, to become morally intrepid without abdication, and to raise the needed revenue to pay the state’s debts instead of reneging on promises made to public employees who have certainly kept theirs. These are the issues regardless of what some legislators, the Civic Committee, the Civic Federation, and the Chicago Tribune, et al. propagate.
Glen is right, of course.
And so is Cinda.
Of course, the pension system’s solvency is threatened if the state doesn’t pay what it promised and owes.
Of course.
What else would happen when the state hasn’t paid its bill for 40 years?
Of course, those in the Civic Committee and even Ingram think the teachers should pay with reduced benefits.
Of course.
Who do you think they think should pay?
Of course.
Of course.
There’s nothing really new here.
And the solution?
Occupy your pension.
Organize. Join us in Springfield on May 2nd. Meet with your local legislator.
Fred Klonsky 
Well stated, sir. Strikes me that Mr. Dick is yelling “Fire” in an empty theater mostly to enjoy the sound of his own voice.
Each time I get the TRS quarterly news letter they are saying things aren’t as bad as the media makes them out to be. NOW the Dick says we sre insolvent. What the hell is going on in the TRS? TRS touts the fact that they outperformed any other system in investment revenue.
It should not be the position of Dick Ingram to recommend pension reductions for already retired teachers to try to make up for the poor funding choices of our legislatures over the past few decades. Further, his proposal is not only premature based on the increased assets of TRS over the past two years, but is completely illegal based on the state constitution. I suggest we reduce Dick Ingram’s to zero by getting rid of him.
I do not have confidence in Dick Ingram to run our retirement system. I went to a meeting last fall where a spokesman from TRS informed our local retired chapter that our pensions were protected by the state constitution. There was a power point program with pie charts to show us how solid our pension is. The twenty year composite of sources of total income from FY year 1991 to FY 2010 showed members paying 22% of the cost, school districts 4%, the state 25%, and our investments payed 49% of the cost. Six months later the director is talking cuts for us retired teachers? You’ve got to be kidding me!
When a family goes bankrupt, they sell assets (houses, cars).
When the state is bankrupt, it should sell assets: land, building, and Lake Michigan water.
If our education leadership (school boards and unions) had not been giving themselves and their members 20% and 15% raises in their last two years just prior to retirement we would not be in this mess. This went on for 10 years primarily in school districts in the northern part of the state. These “end of career” rewards were given to tens of thousands of educators and resulted in reducing the life of the pension annuity to only a few years. After those few years the taxpayers are on the hook to pay for these bloated pensions. To blame the state and taxpayers for this is absurd. It is time our current retired educators at least “sacrifice” their annual 3% increases.
Your theory is that a one-year 20% jump, calculated as part of a four-year salary average that TRS uses to determine the member’s pay-out, is the cause of the underfunding of TRS? This is simply an unsupportable assertion. By the way, it is a practice that has been banned for years, ever since the legislature put a 6% cap on TRS creditable raises.
The “end of career” rewards were for two years before retirement and consisted of a 20% spike the second year prior to retirement and a 15% raise in the last year. This went on from 1997 – 2007 in most of the school districts in northern Illinois (excluding Chicago). After the newspapers exposed this it was changed to 6% per year for the last 4 years of an
educator’s career – which is still extremely generous in this economy. Go to the following website and scroll down to the TRS history graph to see the costly effects of pension spiking:
http://hawthorn73shadowboard.com/?s=trs+graph
All of the information on that graph was provided by TRS. Can you explain the rapid increase in educators pensions since 1999? Pension spiking has resulted in the absurd pensions that educators are currently receiving. For example, the average pension of a retired educator from Palatine D211 in 2009 was $80,726; Stevenson D125 was 74,982. And add on another annual 3% increase over the past 3 years to get an estimated current cost. That so called average pension of $42,000 does not exist here in northern Illinois. School boards and unions gamed the system for their and their own members financial benefit knowing that they were not accountable to those taxpayers outside of their district that are stuck paying for these bloated pensions of tens of thousands of retired educators.
What you describe as a “spike,” “bloated,” and “absurd” has more to do with your ideological blinders than any facts you present.
In fact, many of the negotiated contracts included 10% increases in the final two years and a single bump if one year notice was given.
These buy-outs were intended to reduce the labor costs of local districts by encouraging higher-paid senior teachers to retire and be replaced by lower-paid younger teachers. That is what happened.
The actual impact on the cost to TRS was minimal since the final pension pay-out to retirees is based on 2.2% of the average of the last four years.
That these buy-outs, which saved local districts huge amounts of labor costs, are the cause of 40 years of underfunding by the state to TRS. That is what is truly absurd.
“I am from New Hampshire, ha-ha, I just got this job, ha-ha…” … Not really funny Mr. Ingram and why are you laughing about professional educators paying dearly into our pension system that is obviously in trouble. You should be retired somewhere enjoying your IRA from some private industry, not part of our pension system!! Never having spent time as a teacher, you don’t have a clue…
…. There is nothing humorous about 67 year old teachers in over-loaded classroom with 35 teenagers……a reduced TRS pension and high insurance costs in retirement are not humorous! Go back to New Hampshire!!!