Another warning on pension problems
Much as some of our elected officials may hope, financial problems that are ignored do not go away.
While Illinois House and Senate candidates, many running unopposed or with only token opposition, were mouthing cliches during this year's election campaign, the pension problems in the real world continued to mount.
The board of the Illinois Teachers' Retirement System recently set the state government's funding contribution for the 2014 fiscal year, which begins July 1, 2013, at $3.438 billion, a 27 percent increase (roughly $850 million). How's that for blowing an even bigger hole in Illinois' essentially bankrupt finances?
Now for the really bad news. Assuming the state actually makes the required contributions that it has in the past viewed as optional, TRS will remain in dire economic straits for the long term. TRS' current unfunded liability stands at $53.5 billion, an increase from $43.5 billion in the previous year.
"TRS faces the real risk of future insolvency because of insufficient funding over the last 30 years. ... 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 unless the state meets its total obligations," said TRS executive director Richard Ingram.
To the chagrin of many, Ingram recently has been among those playing the role of truth-teller on the public pension issue. That's because he's not just urged the state to meet its obligations but he's also raised the possibility that the state may have to pare back future financial benefits to address the huge problem the state's five pension systems pose.
Just a couple of weeks ago, teachers' union leaders demanded that Ingram resign for having dared suggest that state officials might consider pruning back the current annual cost-of-living increases retirees receive.
Given the scope of the underfunding, that's just common sense. But the teachers' union leaders, either blind to the nature of the problem or playing to their constituency, were having none of it. That kind of disconnect from reality shows the nature of the problem and demonstrates why self-interested legislators are reluctant to acknowledge the problem, let along talk seriously about how to resolve it.
The total underfunding of the state's public pensions is in the area of $85 billion-plus and rising. Just staying even with current pension demands, like the TRS' $3.438 billion request, and meeting obligations of the state's Medicaid problems, is consuming larger and larger portions of the state's budgets.
The roughly $800 million more TRS is requesting will have to come from money that would otherwise have gone to support other vital services including education, law enforcement, roads and bridges, mental health, etc.
That's why legislators cannot continue to hide from the pension issue. Now that we're past Election Day, the consensus is that House Speaker Michael Madigan and Senate President John Cullerton will work more cooperatively with Gov. Pat Quinn. Minority Republicans also can play a role here.
There is, however, no guarantee they will. Illinois' budget has been burning for months while our elected officials fiddled around. During that time, the problem has only gotten worse. That's the difference between election-year fantasy and financial reality.