Around the country, pension fund officials have often joined union leaders in denying the magnitude of the public sector pension crisis and defending benefit levels, especially for existing employees. Officials at CalPERS, the giant California public sector pension fund, have even threatened to go to court to challenge any of the state's cities that initiate reform that reduces benefits for current employees.
But as the fiscal picture continues to dim for some states, pension officials are now starting to sing a different tune. The latest is the board of the Illinois Teachers Retirement System and its executive director.
But as the fiscal picture continues to dim for some states, pension officials are now starting to sing a different tune. The latest is the board of the Illinois Teachers Retirement System and its executive director.
As recently as last July, the system's director, Dick Ingram, castigated the Chicago Tribune for suggesting in an editorial that the state's pension system for public employees was 'doomed and unsustainable.'
But now the board of TRS has changed its position. In a statement released last week it acknowledged that the combination of Illinois' fiscal woes and the steep funding needs of the state's pension system has produced a scenario which "has deteriorated to the point that the Board no longer has confidence that the State will be able to meet its existing funding obligations to TRS." In a confidential memo obtained by the Springfield Journal Register, Ingram went further, admitting that the situation is so dire that pensions to already-retired teachers may have to be reduced to keep the system solvent.
The Illinois state budget requires annual pension contributions of $5.7 billion to meet its obligations, up from $2.7 billion in 2008. The number will keep rising, as the chart above from the Civic Federation of Chicago illustrates. But Illinois continues to run steep budget deficits and to pile up unpaid bills, which already amount to more than $9 billion and according to projections by the Civic Federation could rise to more than $37 billion in 2017 if the state continues on its current fiscal path. Even TRS, which until a few months ago was confident the state's pension system was sustainable, doesn't like the look of those numbers any more.
But now the board of TRS has changed its position. In a statement released last week it acknowledged that the combination of Illinois' fiscal woes and the steep funding needs of the state's pension system has produced a scenario which "has deteriorated to the point that the Board no longer has confidence that the State will be able to meet its existing funding obligations to TRS." In a confidential memo obtained by the Springfield Journal Register, Ingram went further, admitting that the situation is so dire that pensions to already-retired teachers may have to be reduced to keep the system solvent.
The Illinois state budget requires annual pension contributions of $5.7 billion to meet its obligations, up from $2.7 billion in 2008. The number will keep rising, as the chart above from the Civic Federation of Chicago illustrates. But Illinois continues to run steep budget deficits and to pile up unpaid bills, which already amount to more than $9 billion and according to projections by the Civic Federation could rise to more than $37 billion in 2017 if the state continues on its current fiscal path. Even TRS, which until a few months ago was confident the state's pension system was sustainable, doesn't like the look of those numbers any more.
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