Bob Lyons (right) and me.
Last week Bob Lyons, who was elected to represent retired annuitants on the board of trustees of the Illinois Teacher Retirement System, announced his retirement from the board. The other day I asked him five questions:
Question: After twelve years representing retirees on the Teacher Retirement System board of trustees you announced last week that you will be stepping down. Why now?
Bob Lyons: I will be 78 this month and adding on another four years puts me to almost 83. I am chair of the investment committee. I think it will be more than I want to do. The board is strong with many really sharp people and we have an excellent staff. I am not worried about stepping down. We will spend more of the winter in San Diego when I leave the board.
Q: Looking back, what has been the biggest challenge?
I will divide my answer on the biggest challenge.
First when I was an observer to the board it was sharply divided between the elected and the appointed. They were two different camps.
I met with John Glennon, who had been appointed to the board by Governor Ryan, to ask him the reason. Glennon was everything my father taught me to look up to. He was a Notre Dame graduate, a rich, successful Republican, who lived in Lake Forest, and the top bond dealer for the state of Illinois. And his answer was, “Bob, you have to understand that they [the elected members) are all women. And they are teacher women, and not only that, but grade school teacher women. What do they know about business, about making deals?” It was such a stupid, prejudiced answer that I believed him!
Of course the real answer was that he and Levine were engaged in making pay-to-play deals with our board and other government boards and the elected members would have never gone along if they were knowledgeable. Glennon would resign from the board months before Levine and company were caught. Glennon pled guilty and cooperated, was given a short sentence, and a sympathetic Federal judge suspended his time in prison.
All Glennon lost was his good reputation.
Since I have been on the board the greatest challenge is not getting enough money from the state of Illinois. The last two years, for example, our payments to annuitants have been $1.2 billions more than the contributions to the system from active teachers, school districts, and the state combined. We need to make more than 2.7% with our investments just to break even for the year.
The state of Illinois shorted the fund billions of dollars over the years and now they owe us tens of billions that they cannot pay. We need to do well with our investments knowing that our investments will never be enough to make up the difference, but obviously we still need to try.
Q: Looking forward, what do you see as the main short term and long term challenges?
Fred, the short and long term challenges are the same. Illinois is putting more than 20% of their general revenue into the five pension funds. It is not enough. They will likely continue to try to come up with a way to cut payments until they are forced to face reality and finally raise the necessary revenue.
We did not put them in this predicament, they did it themselves, and the constitution does not allow them to solve their problem by denying us what is owed.
Q: People often talk about the need for pension reform. What reforms do you think are needed?
The reform that is needed is to amortize the total debt, to pay it off in thirty years of equal payments. That would save the state in the long run billions of dollars, but it would mean even higher payment and be too painful in the short term. It will never happen.
Q: What do you plan to do with all your new time?
What will I do with my time? Read more and travel more. I certainly will not miss the drive to and from Springfield. I will miss the people on the board and staff of the system. They are good people and I know that they will do all that they can to protect and grow our fund.
I am confident that we will have our pensions all the years of our lives.