From the Teachers' Retirement System...

Link to the TRS Website

From: trsmessenger@trs.illinois.gov
Date: 4/6/2012 12:11:35 AM
To: rjnewell@midwest.net
Subject: New Reality in State Government

Dear Ronald Newell:

In recent days news reports have circulated throughout Illinois claiming that TRS Executive Director Dick Ingram is calling for changes in the benefits currently received by retired members. We understand completely the confusion and frustration these reports have created.

Neither Director Ingram nor TRS are proposing any changes in member benefits, especially a reduction the current annual cost-of-living adjustment.

Director Ingram and TRS are working to educate members and the general public about a “new reality” in state government that throws the long-term financial viability of the System into serious doubt.

In February Director Ingram informed the System’s Board of Trustees that TRS can no longer be confident that the General Assembly will appropriate all of the money to TRS that is required by law. The State of Illinois’ growing budget deficit and the System’s $43 billion unfunded liability is together causing this “new reality” at TRS.

If the General Assembly does not continue to provide all of the funding called for in state law, calculations done by TRS actuaries show that the System could become insolvent as soon as 2030.

Last year, TRS reported that the System’s financial status was good. For the last several years, the state has been able to make its legally-required annual contribution to TRS. As long as the state makes that payment, TRS can “tread water” indefinitely and be viable well into the future. The System has carried an unfunded liability since 1953 and has never missed a check.

However, recent estimates show that over the next five years the state’s backlog of unpaid bills will grow from $9 billion to more than $34 billion. Legislators are telling us that they simply cannot afford to pay TRS what the law says we should be paid.

Director Ingram told the Board that preventing insolvency may include significant changes for TRS: New revenues must be generated, and if they are not, benefits may have to be reduced.

Any significant changes can only be made by the General Assembly.

Director Ingram has outlined for the media the possible areas where lawmakers may look for a solution. The problem can only be solved through a better balance of spending and revenue and there are only few options to consider – cost of living adjustments, member contributions, retirement age, changing the benefit formula, and increased revenues through new taxes. None of these options is very pleasant to discuss.

Yes, the message from TRS has changed. While we don’t welcome this change in course, we believe that it is best to tell the truth to our members at all times and to help them understand what is going on with the System.

More information about the situation has been posted on the TRS Web site – http://trs.illinois.gov.