By Jayette Bolinski | Illinois Watchdog
SPRINGFIELD – Illinois’ teacher pension system could go broke if the state does not figure out a way to fully fund the system soon, the leader of the retirement system and others have warned again.
Illinois’ Teachers’ Retirement System is seeking $3.4 billion from the state for its portion of the pension costs for fiscal year 2014. That’s about $500 million more than the system sought from the state for the previous fiscal year.
“TRS faces the real risk of future insolvency because of insufficient state funding over the last 30 years,” said Dick Ingram, executive director of the Teachers’ Retirement System, who previously has made the same dire prediction.
“TRS absolutely will be able to meet its obligations to retired teachers in the near future, but we cannot guarantee retirement security for future generations of teachers unless the state meets its total obligations.”
TRS calculates the state’s annual funding contribution based on a formula designed by the state in 1995, and the system reports the required funding amount to the state every year in October.
The latest funding increase comes on the heels of dismal investment returns during the last fiscal year. TRS announced last week that it earned a mere .76-percent return on its investments, primarily because of a negative 11.71-percent rate of return on international stocks. Other investments, including real estate, bonds, private equity and hedge funds, had positive investment returns.