The inbox. Ralph Martire in Crain’s. A pension fix.

By: Ralph Martire
January 16, 2013

There was much wailing and gnashing of teeth when the recent lame-duck session in Springfield ended.

Why? No action was taken to address the $95 billion in debt owed to the state’s five pension systems.

This leaves the systems with just 40 percent of the funding they should have currently, which is well below the 80 percent generally deemed healthy for public systems. Good government groups and editorial boards alikelamented the Legislature’s failure to pass yet another proposal to reduce that ginormous obligation — this time by cutting almost $30 billion in benefits earned by current workers and retirees.

But rather than being dismayed, folks should be relieved. Here’s why.

A problem really can’t be solved unless the proposed solution addresses its true cause. And the proposal that failed to pass during the lame-duck session — like every other proposal introduced to date on this subject — focused its solution on benefit cuts and thereby failed to deal with this particular problem’s true cause.

See, three factors have contributed to the creation of this unfunded liability. The first two are items inherent to the pension systems themselves, like benefit levels, salary increases and actuarial assumptions; and investment losses suffered during the Great Recession. But if those were the only factors creating the unfunded liability, the systems would be around 70 percent funded today, meaning no crisis.

The vast majority of the unfunded liability is made up of the third contributing factor: debt. Indeed, for more than 40 years. the state used the pension systems like a credit card, borrowing against what it owed them to cover the cost of providing current services, which effectively allowed constituents to consume public services without having to pay the full cost thereof in taxes.

This irresponsible fiscal practice became such a crutch that it was codified into law in 1994 (P.A. 88-0593). That act implemented such aggressive borrowing against pension contributions to fund services that it grew the unfunded liability by more than 350 percent from 1995 to 2010 — by design. Worse, the repayment schedule it created was so back-loaded that it resembles a ski slope, with payments jumping at annual rates no fiscal system could accommodate. Want proof? This year the total pension payment under the ramp is $5.1 billion — more than $3.5 billion of which is debt service. By 2045, that annual payment is scheduled to exceed $17 billion, with all growth being debt service.

It is this unattainable, unaffordable repayment schedule that is straining the state’s fiscal system — not pension benefits and not losses from the Great Recession. And no matter how much benefits are cut, that debt service will grow at unaffordable rates. Which means decision-makers can’t solve this problem without re-amortizing the debt.

Given that the current repayment schedule is a complete legal fiction — a creature of statute that doesn’t have any actuarial basis — making this change is relatively easy. Simply re-amortizing $85 billion of the unfunded liability into flat, annual debt payments of around $6.9 billion each through 2057 does the trick. After inflation, this new, flat, annual payment structure creates a financial obligation for the state that decreases in real terms over time, in place of the dramatically increasing structure under current law. Moreover, because some principal would be front- rather than back-loaded, this re-amortization would cost taxpayers $35 billion less than current law.

One last thing — it actually solves the problem by dealing with its cause.



Once again, TRS Executive Director Richard Ingram says we need sacrifice. What he doesn’t say? Teachers already have.

Teacher Retirement System’s Richard Ingram pens a commentary in the Trib calling on sacrifice to make TRS solvent.

Sacrifice by whom?

He only hints at what he thinks is the answer.

But by refusing to say, one must assume he is doing what all politicians do when they call for sacrifice.

Sometimes they say “shared sacrifice.”

But what they mostly mean is we should sacrifice. Even though we already have. The money that the state owes to teachers for over fifty years of failing to meet state pension obligations is money lost to us. Sacrificed. Illegally stolen.

Richard Ingram won’t say that.

Because it is true.

By Dick IngramDecember 9, 2012

Last October, during one of the many public meetings I have spoken at on behalf of Teachers’ Retirement System throughout Illinois, I was confronted by an angry teacher.

During the meeting, I had described in blunt terms the serious financial challenges facing TRS and the difficult time state officials were having in finding a solution that would secure the system’s future for all educators; those who are retired and those still teaching.

This man was angry. He deserved to be. He felt cheated by a system that had promised him security when he retired. And quite frankly he has been cheated.

I found myself face to face with him after the meeting. By this time his anger had ebbed, and he was reflective. “This isn’t really about me, is it?” he said. “It’s about my daughter.”

It turned out his daughter is in college and wants to follow in her father’s footsteps and teach in Illinois. But right now TRS cannot promise her a pension in 30 or 40 years when she finishes her career.

“Can we fix it?” he asked. Yes, I explained, we can. But any solution will be painful and involve sacrifice. He thought a moment more and posed a question I have not been able to get out of my head — a question we all have to answer.

“Why wouldn’t we do that?”

Over the past 20 months, I have written to and spoken to thousands of Illinoisans about the problems TRS faces in keeping the pension promises made to our members.

Describing the potential insolvency of TRS, and not being able to keep our members’ retirement promises, has generated many difficult — and even angry — conversations. The truth is often hard to accept. But everyone in Illinois deserves to hear the truth, however inconvenient. The challenges TRS faces are steep. But they are not beyond solution.

Say what you will about Gov. Pat Quinn’s latest effort to spark the proper attitude toward pension reform. Beyond his Squeezy the Pension Python video campaign, there is an important kernel of truth in the central message.

All of these difficult conversations about pensions are far more about securing the future than balancing the present or understanding the past.

For the past eight months, TRS has emphasized that state leaders must act now to prevent insolvency in the future. TRS has the same fiduciary obligation to the 25-year-old teacher as to the 85-year-old retiree. Fixing the problem for the young teacher fixes it for everyone.

Why wouldn’t we do that?

Those five words capture the attitude we need to solve the pension problem in Illinois. We are at our best when we think of the future instead of the present, especially when the present is challenging and difficult. When we sacrifice for the next generation, we do great things for today. Who among us would not strive, in lean times and good times, to make the future better for our children and grandchildren?

That is how we have to approach the pension challenge in Illinois. That is how we must think about the choices before us to put TRS and the other Illinois public pension systems on sound footing. It is not about us, it is about those who come after us. They might not even know or appreciate the sacrifice made for them, but what does that matter?

Right now we have the opportunity to fix an old problem that has lingered in Illinois for decades — if we focus on the future.

Why wouldn’t we do that?

Dick Ingram is executive director of Teachers’ Retirement System of Illinois.


TRS Board meets and insists on the constitutionality of any pension changes.

As I reported, the Board of Trustees of the Teacher Retirement System met yesterday in Springfield.

A number of people spoke during the public comment section of the meeting. Most expressed concern with the recent “new reality” comments of Executive Director Richard Ingram.

The Board is composed of four active trustees, two annuitant trustees and one appointed by the Governor.

One of the board members is IEA President Cinda Klickna.

While comments included those that asked for a sanction against the Executive Director, none was taken.

The Board did add another point to its memo about the “New Reality” indicating that any solution must be constitutional.

Ed Rosenthal, retired teacher and candidate for IEA Retired Chair reported, “For my part I addressed the question of how TRS would address the damage done by the article Ingram was quoted in and how every paper in the state had seemingly picked up the story as Ingram calling for a decrease in benefits. I pointed out that TRS needs to get the legislature to focus on the funding aspect of the pensions and that any solution shouid include IEA’s 3 basic concepts: 1) It must be constitutional; 2)It must be fair; and 3) It must lead to the sustainability of the pension system.”

Saturday coffee.

Retired teacher Ken Previti leaves these cards around to show the impact of teacher pensions on the Illinois economy.

The transition from active to retired teacher has been an eye opener for me.

I don’t think that Quinn, Madigan, Cross and Fahner get who they’re dealing with.

The movement of retired teachers and other state employees who only have their state pensions to live on is big and getting bigger.

People are angry.

And they are organized. And getting more organized.

This is what I have discovered the past few weeks.

There are the two formal organizations of retired teachers: IEA-Retired and the Illinois Retired Teacher Association.

And then the informal networks of retired teachers. People with emailing lists of hundreds. Dozens of these email lists.

Do you think that 1,000 active and retired teachers just happened to show up to hear and question TRS Executive Director Richard Ingram in Orland Park the other night?

Or the 2oo in Naperville on Thursday?

There are 363,000 TRS members in Illinois.

Over 80,000 retired.

And their families.

I’m not even talking about whether Quinn’s proposals are constitutional, sustainable or fair.

They’re not.

I’m just talking old-fashioned politics.

Tell nearly a half million voters in the state that you are about to screw them bad.

I want to see these politicians, Dems and Republicans, run a campaign on that.

Then sit back and watch those emails fly.

People ask me what I’m going to do after June 8th?

I’ll have more time.

Who knows? You might even find some retired teachers occupying the Governor’s office.

Was TRS’s Ingram telling a lie then? Or now?

Richard Ingram has been Teacher Retirement System Executive Director for a year.

For a year he has communicated to TRS members that the system was solvent and that the issue of reducing benefits was not on the table.

Then the press reported a memo by Ingram claiming that the system is threatened with insolvency by 2029 and that benefit reductions need to be considered in light of a “new reality.”

Retirees and pension activists Patricia and Richard Bryan point this out to the TRS Board of Trustees and to Ingram in a letter that was forwarded to me.  I reprint the entire letter at the conclusion of this post.

Take the time to read it.

The Bryans ask,  “Mr. Ingram, have you been telling the truth about our pension fund’s position all along, or did you only begin a week ago?”

Since the release of the leaked memo Ingram, the TRS Board of Trustees and some in the IEA leadership have been dancing.

As the Bryans point out, no matter the explanation, the damage is done.

The issue of benefit reductions for retirees, which even the worst of the pension killers in the General Assembly and the Civic Committee have not dared to propose, has now been given legitimacy by the very people who were charged with defending our pensions.

Dear Mr. Ingram:
On April 4 we wrote to the trustees, urging them to fire you.  Since then, we’ve read additional news stories and several of your letters to newspapers. We’ve also gotten explanations of your behavior from several trustees.  We are more convinced than ever that you can not continue to serve as our director.  In order to understand why you can not continue in your job, we must start with the obvious question — what is the job of TRS and its director?  

You, yourself, best answered this when you addressed a group in Crystal Lake on October 4, 2011.  A videotape of your speech can be found on YouTube at  
Dick Ingram, Executive Director TRS  
(Your answer to this specific question begins at about  4 minutes, 55 seconds.)  

 You say that your job is “promise keeper.”  You are constantly reminding the trustees as well as your subordinates that they are also promise keepers.  You said last October that every day you go to work you remind yourself that you are a promise keeper.  (Apparently you have stopped your daily reminder.)  The complete context of your talk makes it clear that the promises to which you refer are the benefits that are protected in the constitutional clause.  We agree.  Your performance in office should be primarily judged by your efforts to keep the promises made to TRS members.  But your answer was brief and necessarily simplified.  It leads to the more difficult question — what exactly are those promises?

Many believe that the best answer can be found in a scholarly article by Eric M. Madiar.  The author is Parliamentarian of the Illinois Senate.  The legal and historical research behind his article is truly impressive.  The article can be found at  
Mr. Madiar’s findings have proven essential to TRS, IFT, IEA, and IRTA.  We assume that all TRS trustees have read the article.  We are forced to conclude, Mr. Ingram, that you have not read the Madiar article.  If you understood the guarantees explained in the article and TRS’s commitment to these promises, you would not have made your statements of this past week. 
You have recently announced your intention to educate TRS members about the reality of our pension problems.  Many of us have been observing and studying those problems for decades.  We voted for the constitution some forty years ago.  We raised the alarm when the legislature stiffed the pension fund year after year.  Many of us have been on top of this story for decades.  Forgive us, Mr. Ingram.  We hate to condescend, but perhaps you also need to be educated.  The political and economic pressures that you call “the new reality” are not new at all.  The unfunded balance goes back to 1953.  When the constitutional convention drafted our guarantee clause, the balance was worse than it is today.  Political and economic pressures are not reasons to abandon the constitutional guarantee.  The exact opposite is true.  Political and economic pressures are precisely the reasons our guarantee was created.  
You now ask the question — if the state won’t meet its funding obligations, should we consider reducing benefits to retirees?  Madiar explains with great clarity that this question itself is a huge threat to retirement security.  The question you asked this week was asked in New Jersey more than forty years ago. The question led to a tragic court decision there.  Retired teachers were devastated.  Madiar convincingly explains that the framers of our constitution understood that the very question was the biggest threat to retirement security.  They drafted our guarantee clause so that that question could not be used to reduce benefits for Illinois teachers.
Mr. Ingram, you ask a very important question.  But that question was thoroughly researched, extensively debated, and definitively answered at the time of our constitutional convention.  Many retirees were part of that public debate.  We were especially pleased with the pension guarantee.
It’s obvious, Mr. Ingram, that you were not watching this process.  No one could blame you.  We would estimate that you were in grade school out east when our constitution became the law of the state.  Your ignorance then was to be expected.  Your apparent ignorance now is completely unacceptable for the chief “promise keeper” of the TRS.

Frankly, Mr. Ingram, have you been telling the truth about our pension fund’s position all along, or did you only begin a week ago?

Your recent shocking statements have been rationalized with the explanation that you were only trying to tell the truth to the retirees and teachers.  We thought you’d been telling the truth all along.  We applauded each time TRS posted one of your letters. 

It’s obvious why you had to concoct the phrase “the new reality”.  You assumed office in January, 2011.  For over a year, your positions were consistent.  Did poor investment results cause the new reality?  No, 2011 was a banner year.  What triggered your reversal?  The trigger clearly was a flood of newspaper articles that began when a newspaper obtained a secret email from you to the trustees.  The email showed that while you were saying one thing to your members and the rest of the public, you were urging trustees to accept a far different version.

You’ve explained that the revelations this week were the result of your deep desire to tell the truth to your members.  Forgive us, Mr. Ingram, but this answer is not credible.  If the truth were in your secret memo, and you wanted your members to know the truth, then you would have sent them a copy of the memo.  We didn’t get a memo on February 9th.  Two months passed with still no announcement to your members.  This whole mess was not triggered by your desire to tell members the truth.  Quite the opposite, you simply got caught hiding what you now say is the truth.
You have recently asked if COLA or other benefit levels should be changed because of political and economic pressures.  Your apologists say that you haven’t made any specific proposals.  Obviously, such specificity is not required in order for an executive director to severely weaken our public position.  If your recent reported statements result in any benefit loss for retired teachers, then the slippery slope has just begun.  If the state can reduce the benefits of those already retired, then no teacher has a secure future.
There is only one position for TRS to take regarding the constitutional guarantee of retirement benefits.  It is the same position TRS has had since you were a child.  That guarantee is clear and unambiguous.  There is only one way TRS can protect the rights of all of its members.  It must insist that the constitution shields us all.  If Illinois takes away any of our retirement benefits, then the constitutional guarantee is meaningless, and every member’s benefits are at risk.
You have sent several letters to newspapers recently.  You deny that you advocated reducing any specific benefits.  You say that you did not propose any change in member benefits or COLA.  Instead, you say that you have outlined possible areas where lawmakers may look for a solution.  You include “changes in the cost of living adjustment, changes in retirement age and in the benefit formula, and increase revenues through new taxes.”
Apparently, the newspapers saw very little difference between the statements “We should reduce retirement benefits.” and “We must now consider options reducing retirement benefits.”  We don’t see much difference either.
We began this email by saying that we had urged the trustees to fire you.  How much better would you feel if we tried to retract the statement, saying instead that it was high time that the trustees considered firing you?
We noticed that there are some options for Illinois that you did not suggest.  Illinois could counterfeit hundred-dollar bills to solve the problem.  Another idea is that we could rob a number of banks in Indiana.  We imagine that you omitted these from your options list because they are completely illegal.  Yet it has always been the position of TRS that no retirement benefit may be diminished.  This is statute law and constitutional law.  Why would you include an option which TRS sees as illegal? 
Others share the TRS view.  Senate President Cullerton says it would be unconstitutional to reduce benefits for those already retired.  House Republican leader Tom Cross pushes cuts for active teachers, but has not advocated changing pension benefits for those already retired.  He said, “In response to your recent comments, I’ve never had members of the General Assembly advocate that…”  In fact, no legislator from either party has introduced a bill that included any reduction of benefit for those already retired.  The Sidley law firm, arguing for the dreaded Civic Club, differs from Madiar in many ways, but even they say it would be unconstitutional to reduce any benefit of those already retired.  I only know of one person in a position of authority who thinks it’s constitutional to reduce retirees’ benefits.  That person is you, Mr. Ingram, our promise keeper.
Mr. Ingram, you have been caught saying one thing publicly and nearly the opposite in a secret memo.  You have taken important positions without the authority of the majority of your board.  You have both contradicted and weakened long-standing positions of TRS.  You have severely embarrassed yourself, your board, and the institution.  Your initial comments started a firestorm.  Your later non-denial denials rekindled the flames.  We don’t know if you intentionally did all of this damage, or if you just stumbled into it.  We don’t care.
As Oliver Cromwell told Parliament in 1653, “You have sat too long for any good you have been doing lately…  Depart, I say; and let us have done with you.  In the name of God, go!”
Richard Bryan
Patricia Bryan

Pension Call Tuesday: May 2nd bus to Springfield.

Our Park Ridge Education Association is getting ready to head for Springfield on May 2nd. Current plans are to leave Des Plaines around 8AM.

This does not replace back home lobby efforts. It is in addition to it. Messages to General Assembly members can be sent from here.

We have a noon appointment with Park Ridge Senator Dan Kotowski to discuss pension issues on May 2nd. Other PREA members will meet with their own state representatives or senators. IEA VP Kathi Griffin has invited us to have our box lunch picnic on the IEA headquarters lawn. Then we are heading over to TRS headquarters to express our disappointment with the recent statements of TRS Executive Director Richard Ingram about cutting retiree benefits and the “new reality.”

We expect to get back by 5PM.

Bus riders will get a green t-shirt that says: My pension. I paid. You promised.

If you have an interest in joining us on the bus down to Springfield, please make your reservation by Friday. You can contact us here or at

Pension Call Tuesday.

The seats are starting to fill up on the PREA bus to Springfield on May 2nd. Our schedule is to meet with Park Ridge Senator Dan Kotowski. Those of us who live in other legislative districts will also fan out to meet with their home legislators. Then we will picnic on the IEA headquarter’s lawn.

IEA Vice-president Kathi Griffith has been very helpful in making arrangements.

This week’s reported comments by TRS Executive Director Richard Ingram have caused great anxiety among teachers, both active and retired.

His view that benefits might have to be reduced to retired teachers is unacceptable.

Let your legislator know that:

  • Teachers have always met their obligations to TRS.
  • Teachers receive no Social Security. TRS is our only secure benefit when we retire. It must remain secure.
  • The state must, as its constitutional duty, meet its obligations to present and future TRS annuitants.

Contact your legislator here.


TRS’s Dick Ingram scares the shit out of people.

A leaked memo by TRS Executive Director Richard Ingram has caused a flood of concerned emails into my inbox this weekend.

Ingram is predicting insolvency for the teacher pension by 2029.

And what is scaring retirees is his threat that reduced benefits to retirees was a likely solution.

First of all, Ingram seems to view things a little too much as a benefit problem and not a funding problem.

When he spoke to the IEA RA a few weeks back, I believe he was called out for this.

Changing pension benefits for already retired employees has not been embraced even by House Republicans, whose leader, Rep. Tom Cross of Oswego, has pushed strongly to reduce benefits for people who are on the job now but not yet retired.

But in an interview Friday, Ingram said the state might have to target cost-of-living pension increases for retirees. Retirees now receive automatic COLA increases of 3 percent annually, which is compounded.

“What we’re saying is that the number is so bad is that you have to start having those conversations,” Ingram said. “The reality is that if you look at the pension math, the single biggest cost is the COLA.

“I’m really stuck. I have to say that the math is not trueing up with what is constitutional or fair or earned or whatever else.”

Cross praised Ingram’s shift in position, but still declined to endorse changes in the benefits of already-retired members.

Some responses to the stir caused by Ingram?

IEA President Cinda Klickna:

In the recent TRS meeting, Ingram told the board that, “The evidence has mounted to the point that it is prudent to assume that we will not be funded at the levels provided in statute. Leading members of the General Assembly have all but said as much, and in the final analysis that is what really matters.”

The TRS actuaries have run figures that show decreases in State funding could lead to insolvency. These are realities that the TRS Board feels must be shared with members and discussed with legislators. IEA will continue in our ongoing efforts to find solutions.

Ingram’s point is that the pension issue needs to be addressed. Continuing to underfund the pension systems is not acceptable.

In my view, the best resource around is Glen Brown’s blog.

As a young man, I was taught to “pay my debts” and to “keep promises” that I made to others. I was taught to “face the consequences” of my actions. I was taught to “work hard” and “never give up.” Both of my parents never finished high school because they needed to find jobs to support themselves. They were uneducated, but they knew a lot about instilling responsibility, integrity, courage, discipline, and perseverance. I wish these values were evident in our Illinois policymakers today: to work hard to find the ethical solution for funding the public pension systems, to become morally intrepid without abdication, and to raise the needed revenue to pay the state’s debts instead of reneging on promises made to public employees who have certainly kept theirs. These are the issues regardless of what some legislators, the Civic Committee, the Civic Federation, and the Chicago Tribune, et al. propagate.

Glen is right, of course.

And so is Cinda.

Of course, the pension system’s solvency is threatened if the state doesn’t pay what it promised and owes.

Of course.

What else would happen when the state hasn’t paid its bill for 40 years?

Of course, those in the Civic Committee and even Ingram think the teachers should pay with reduced benefits.

Of course.

Who do you think they think should pay?

Of course.

Of course.

There’s nothing really new here.

And the solution?

Occupy your pension.

Organize. Join us in Springfield on May 2nd. Meet with your local legislator.