Keep in mind that the Idiot running this State and party are Liberal Democrats. These are the Clowns that criticized Scott Walker for what he did in Wisconsin, which by the way turned that state around 100%
In the next bad surprise for taxpayers and Illinois’ downstate teachers, the Teachers’ Retirement System, or TRS, announced that the shortfall in its pension fund has increased by $6 billion. The bigger shortfall means that without real pension reform, teachers may see their pensions cut and taxpayers may be called on to bail out the nearly insolvent pension fund.
There are more than 98,000 current retirees in TRS, whose members include Illinois’ local teachers and educational administrators, excluding the city of Chicago. It stands as Illinois’ largest state pension fund. And its shortfall just ballooned overnight.
The increased shortfall is the result of a decrease in the rate of return TRS expects to earn from its investments in the future. TRS lowered its expected rate of return to 7.5 percent from 8 percent. The system’s unfunded liabilities now total $60 billion.
This action confirms the point that many groups, including the Illinois Policy Institute Institute, have made for years: the true size of Illinois’ pension crisis is far larger than politicians have led Illinoisans to believe.
Think about it this way: If TRS assumes it can earn high investment returns in the future, then it needs less money to meet its future pension obligations. But by lowering its expected future returns, TRS and the state are finally admitting their previous investment assumptions were too optimistic.
The 0.5 percent reduction will make a big difference in the amount the state must contribute to TRS.
According to the pension fund, if the 7.5 percent return had been applied to Illinois’ $3.4 billion contribution to TRS in 2015, the state – meaning taxpayers – would have owed the fund an extra $500 million.
As was mentioned, lowering the investment rate increases TRS’s total unfunded liabilities to $60 billion – bringing TRS closer to bankruptcy and forcing taxpayers and younger teachers to pay more into a broken pension system. TRS now has just 40 cents for every dollar it should have today to meet its future payouts.
Some will argue that this is a move in the right direction – it’s a good thing that the state and pension systems are finally being more responsible by assuming a lower rate.
But they are missing the larger point. Lowering the investment rate only shows that the state’s politicians have been hiding how bad this pension crisis really is.
And it will only get worse. Detroit pension funds, as part of bankruptcy negotiations, are lowering their discount rate to 6.75 percent. At that rate, Illinois’ shortfall would jump several billion dollars higher.
The Illinois Policy Institute has argued for some time that the state’s pension debt is larger than the state admits. When using more conservative investment rates, Illinois’ pension debt is actually double what the state says it is.
Last year, Moody’s Investors Service began using similar discount rates in their methodology. The ratings agency also found that Illinois’ pension shortfall is nearly double what the state reports.
TRS’s lowering of its discount rates – and the never-ending string of bad news on state pension funds – show that Illinois needs to implement real pension reform. That means finally getting politicians out of the retirement business altogether.
http://www.illinoispolicy.org/premiums-on-the-rise-for-illinoisans-under-obamacare/
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