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TRS board tries to pour some water on the Ingram firestorm.

April 6, 2012

TRS Executive Director Richard Ingram either floated a balloon or sprung a leak.

But his comments last week about the potential insolvency of TRS and the need to reduce benefits has caused an uproar.

Nobody, from the leadership of the IEA to the legislators in Springfield, wanted this to be the topic of conversation among rank-and-file teachers while the public debate has been about funding.

The fact of the matter is that the backlash that has caused the back-sliding on the issue of member benefit cuts shows just how much the General Assembly and the Governor must worry about if they don’t preserve our constitutionally protected pension.

There will be hell to pay.

So yesterday an email went out to every TRS member to try and put some water on the firestorm.

Here is the letter they sent out.

Dear Frederick Klonsky:

In recent days news reports have circulated throughout Illinois claiming that TRS Executive Director Dick Ingram is calling for changes in the benefits currently received by retired members. We understand completely the confusion and frustration these reports have created.

Neither Director Ingram nor TRS are proposing any changes in member benefits, especially a reduction the current annual cost-of-living adjustment.

Director Ingram and TRS are working to educate members and the general public about a “new reality” in state government that throws the long-term financial viability of the System into serious doubt.

In February Director Ingram informed the System’s Board of Trustees that TRS can no longer be confident that the General Assembly will appropriate all of the money to TRS that is required by law. The State of Illinois’ growing budget deficit and the System’s $43 billion unfunded liability is together causing this “new reality” at TRS.

If the General Assembly does not continue to provide all of the funding called for in state law, calculations done by TRS actuaries show that the System could become insolvent as soon as 2030.

Last year, TRS reported that the System’s financial status was good. For the last several years, the state has been able to make its legally-required annual contribution to TRS. As long as the state makes that payment, TRS can “tread water” indefinitely and be viable well into the future. The System has carried an unfunded liability since 1953 and has never missed a check.

However, recent estimates show that over the next five years the state’s backlog of unpaid bills will grow from $9 billion to more than $34 billion. Legislators are telling us that they simply cannot afford to pay TRS what the law says we should be paid.

Director Ingram told the Board that preventing insolvency may include significant changes for TRS: New revenues must be generated, and if they are not, benefits may have to be reduced.

Any significant changes can only be made by the General Assembly.

Director Ingram has outlined for the media the possible areas where lawmakers may look for a solution. The problem can only be solved through a better balance of spending and revenue and there are only few options to consider – cost of living adjustments, member contributions, retirement age, changing the benefit formula, and increased revenues through new taxes. None of these options is very pleasant to discuss.

Yes, the message from TRS has changed. While we don’t welcome this change in course, we believe that it is best to tell the truth to our members at all times and to help them understand what is going on with the System.

More information about the situation has been posted on the TRS Web site – http://trs.illinois.gov.

Member Services Division
Teachers’ Retirement System of the State of Illinois

2 Comments leave one →
  1. April 6, 2012 7:54 am

    I have a list of names of people who are prepared to steal MY money from me! SO does this mean that I must now include the names of the TRS board members on this list? And why do other members of the board seem to suggest that Ingram’s comments are strictly his own?

  2. MiC permalink
    April 6, 2012 11:13 am

    Welcome to the “New Reality” where those who serve the public, are trusted with our state’s children every day, and never missed their payments are the ones to blame and on who’s backs solutions will be foisted.

    In this “New Reality” Illinois legislators offer corporations earning billions in annual profits millions in tax breaks to remodel their bathrooms while public schools crumble.

    The “New Reality” features Illinois legislators kowtowing to corporate “job creators”, giving millions in tax breaks to appease their threats just as schools districts near their corporate headquarters contemplate budget cuts that negatively impact education.

    And thanks to this “New Reality” these corporate “job creators” fire hundreds of employees locally, and thousands nationally, after Illinois legislators vote overwhelmingly in their favor.

    This “New Reality” see Illinois legislators following the rational that the only way to fix the state’s budget issues is through cutting spending. Discussion of permanent new revenues such as a graduated income tax, reform of TIF districts, or elimination of corporate welfare are not seriously considered.

    The economics of this “New Reality” see Illinois legislators focusing squarely on austerity measures without any acknowledgement or realization of the economic impact cutting earned benefits of hundreds of thousands of middle class citizens will cause, nor how such cuts will remove millions from the state’s economy further reducing needed state revenues.

    In this “New Reality” Illinois legislators claim that constitutional language such as “shall not be diminished or impaired” is somehow unclear, imprecise language that needs to be challenged.

    To those in the Illinois legislature, the “New Reality” means that a “contractual relationship” doesn’t really mean “contractual” or “relationship” and can be renegotiated at any time after being entered into.

    In fact, the “New Reality” stops even pretending that Illinois legislators will follow the very laws they pass, even if it causes the insolvency of the pension systems hundreds of thousands who are ineligible for Social Security rely upon as their sole source of retirement savings.

    But most surprisingly, this “New Reality” believes that those the Illinois legislature is looking to scapegoat and deprive of their earned benefits will trust legislators who won’t even follow their own laws with any new deal they propose moving forward.

    Reform Springfield.

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