This year’s Illinois budget includes funding of the state’s statutory required payment to the teacher retirement system.
In the face of coronavirus budgetary stressers, retirees can be thankful that our retirement savings and health insurance subsidies were not once again used as a credit card in place of added revenue.
One can only imagine how things would have been different if Bruce Rauner was still governor.
Not only in regard to funding the state’s pension system, but in responding to the virus.
We can be thankful that he is gone.
I have to point out that the statutory payment is a political number, not an actuarial number. It means that the current year’s needs of the TRS system will mostly be covered. It will make no dent in the $140 billion debt/liability. That number will continue to increase.
It is not full funding.
It is understandable that under current conditions this is the way it went. But the coronacrisis will not last forever. I hope the fair tax will pass in November. I hope the legislature and the Governor will work on the pension debt with the seriousness they seem to give to other state issues.
We retirees will be there to remind them.
Here is the report from the Teacher Retirement System.
Full Statutory Funding for TRS in New State Budget
TRS is in line to receive its full statutorily-required government funding – $5.14 billion – in the new state budget that takes effect on July 1.
Full statutory funding in fiscal year 2021 and in the future is a vital component of a state law that helps stabilize TRS finances and requires the System to reach 90 percent funding by 2045.
During a coronavirus-shortened spring legislative session, Gov. JB Pritzker and the General Assembly agreed on a $42.6 billion state budget for fiscal year 2021 that includes an overall appropriation of $8.6 billion for TRS and Illinois’ four other state retirement systems.
Gov. Pritzker is expected to sign the fiscal year 2021 budget into law before the end of June.
Due to the nationwide economic devastation and tax revenue decline caused this spring by the COVID-19 pandemic, it was not a sure bet that state government would be able to allocate the year’s full statutory contribution in the upcoming budget. However, in the last few weeks Gov. Pritzker and legislative leaders reaffirmed their commitment to full statutory funding for TRS and the other retirement systems.
And despite the revenue loss state government experienced during the January-March quarter of calendar year 2020, TRS is on course to receive its full statutory allocation for the current fiscal year – $4.8 billion.
Even though state government is meeting its legal funding responsibility to TRS, the fiscal year 2021 appropriation is nonetheless well short of the “full funding” amount set by actuaries that analyze TRS finances on an annual basis.
While TRS currently has more than enough funds on hand to pay all pensions on time and in full for the foreseeable future, the long-term fiscal well-being of the System requires a funded ratio that increases beyond 40 percent.