As I reported in the previous post, the Illinois legislature reversed a TRS decision to reduce the assumed return on investments.
The impact of this decision is to reduce the amount the state will contribute to the state teacher retirement system and increase the debt and liability.
From the Illinois Retired Teachers Association:
For the first time in over two years, the state of Illinois has a full year budget. Up until this point, the state had gotten by on court ordered payment and continuing appropriations and stop gap budgets.
Senate Bill 6, which included the partial year for 2017 and full year budget for 2018, passed the General Assembly last week. Although promptly vetoed by Governor Rauner, it was over ridden by both the House and the Senate so it takes effect immediately. This includes full funding for the Teacher Retirement Insurance Program. Unfortunately, the General Assembly changed the funding formula for retirement systems, which allows for smoothing. Because of this smoothing, TRS will receive approximately $500 million less than the actuarial amount certified by the board earlier this year
Senate Bill 9 is also now law because both chambers overrode the governor’s veto. This is the revenue portion of the budget package. This implements a 4.95 percent personal income tax, up from 3.75 percent, and increases the corporate rate to 7 percent.
Senate Bill 42, the third component of the package, is the implementation arm of the budget. This piece of legislation provides the spending authority to the comptroller to spend the funds allocated in the budget. You might remember earlier in the year this bill contained language that would have removed the continuing appropriation for TRIP. This version of the legislation does not contain that language.
Where does the state stand now:
Education funding is the final sticking point with the budget.
Senate Bill 1, the education funding reform legislation passed both the House and the Senate, and is currently waiting to be signed into law. The problem is the governor has said he would veto it, but he has not thus far.
This legislation is tied to the budget because as the budget is written, funding to local school districts can only be distributed based on the new funding formula in the bill, so unless the governor signs Senate Bill 1 schools may not open on time.
Both chambers of the General assembly are prepared to return to Springfield before the end of July to override the governor’s veto if and when he decides to do that. If he decides to sign it into law then schools will receive their funding as laid out in the budget bill.
As we continue through the summer, the General Assembly working groups are also continuing to work on other issues the governor has insisted he wants passed such as a property tax freeze, workers compensation reform and local government consolidation just to name a few.