IEA President Cinda Klickna will be chairing this week’s TRS board of trustees meeting.
A Reuter’s report by Dave McKinney and Karen Pierog suggests that Illinois Governor Bruce Rauner is not happy with a possible TRS decision to lower the assumed rate of return on pension investments.
A Monday memo from a top Rauner aide said the Teachers’ Retirement System (TRS) board could decide at its meeting this week to lower the assumed investment return rate, a move that would automatically boost Illinois’ annual pension payment.
“If the (TRS) board were to approve a lower assumed rate of return taxpayers will be automatically and immediately on the hook for potentially hundreds of millions of dollars in higher taxes or reduced services,” Michael Mahoney, Rauner’s senior advisor for revenue and pensions, wrote to the governor’s chief of staff, Richard Goldberg.
When TRS lowered the investment return rate to 7.5 percent from 8 percent in 2014 the state’s pension payment increased by more than $200 million, according to the memo.
While TRS investment returns have been weak the last few years, it is considered among the healthiest of investment returns compared to other state pension systems.
That doesn’t improve the $111 billion liability carried by the five Illinois pensions systems, TRS being the largest of the five.
A decision by the TRS board to lower its estimated rate of return would increase the liability. The board is required to submit the estimate each year to the legislature.
The Governor and his people want the board to delay submitting an estimate until after the November election.
As I reported earlier, there are three empty seats on the TRS board that the Governor has seemed not to have had any interest in filling until now.
Reports are that Rauner is demanding that no decision on lowering the estimated return until after he names his people to the TRS empty seats. But TRS is scheduled to meet this week with IEA President Cinda Klickna chairing the meeting in place of the expected absence of Rauner’s pick for board President, Tony Smith.
Klickna wears two hats as TRS board member and IEA President.
Since assuming office, Rauner has insisted on pro-corporate, anti-union concessions in exchange for a budget agreement.
This situation doesn’t help him.