Funding Strong Schools & Fair Pensions: State Representative Linda Chapa LaVia Northern Illinois Jobs With Justice

Funding Strong Schools & Fair Pensions: Sponsored By: State Representative Linda Chapa LaVia Northern Illinois Jobs With Justice Fixing Illinois’ Revenue Problem

Illinois Pension History and Facts Maria Owens IEA-Retired & IRTA

Teacher Pensions The History The Here & Now The Future

HISTORY – 1915TRS began (Dunne) – 1939Social Security or TRS (Horner) – 1950Trouble - 23% funded (Stevenson II) – 1970New Constitutional Protections (Ogilvie) – year payment (Thompson) – year plan - 90% funded by 2045

History (con’t) – % funded - $43B debt – State borrows $10B (Blagojevich) – Cut pension payments by $2B to pay other bills – 2008Pension debt $42B 63% funded – 2009Pension Modernization Task Force (Quinn) – 2010Tier II pension created

Illinois Constitution “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

Here & Now 390,000 Active members of TRS 90,000 Retirees

Member Stats Active Members Average Age42 Average Years of Service 12 Average Salary$66,044. Oldest Full-time Teacher81

Member Stats (con’t) Retired Members Average Age70 Average Years Service28 Average Pension$46,452. Oldest Retiree107

Pensions 18 pensions (0.02%) are between $200,000 and $250,000, [all administrators]. 153 pensions (0.17%) are between $150,000 and $200,000, [primarily administrators]. 1,985 pensions (2.26%) are between $100,000 and $150,000, [mostly administrators]. 33,885 pensions (38.52%) are between $50,000 and $100, ,920 pensions (59.03%) are below $50,000 (IEA).

Of the 51,920 pensions, 17,269 are less than $20,000. The average statewide TRS monthly annuity after 29 years teaching is $3,565. TRS members DO NOT receive Social Security benefits for their years as an educator. Their sole retirement is their TRS. The state saves billions by not having to pay into Social Security, which private employers must do; teachers also pay a monthly premium for their healthcare (TRS).

Misconceptions Teachers also get Social Security. Teachers do not get S.S. Converting to S.S. would cost the state more money and they couldn’t take pension “holidays”. Teachers get free healthcare. The average cost is $560 per month for a retiree’s healthcare.

Misconceptions (con’t) A defined contribution plan would cost the state less money. The PMTF found that defined contribution plans cost more. Nebraska recently reverted back to defined benefit plan after 20 years. Illinois’ pension benefits are overly generous. Illinois ranks in the bottom one fifth of all states for retirement benefits for state workers. US Census Bureau, Employee Retirement Systems of State & Local Government

Misconceptions (con’t) Illinois’ pensions are too costly. The normal cost across the 5 pensions is 26% under the national average. Bureau of Economic Analysis, 2008 Illinois’ costs for education are too high. Illinois ranks last (tied with Nevada) for state funding for education. Illinois has a pension problem. No, Illinois has a revenue problem.

STATE RETIREMENT SYSTEMS Factors Causing Change in Unfunded Liabilities FY Total Increase = $35, MIL Pension Modernization Task Force

Finding of Gov. Quinn’s Pension Modernization Task Force “In sum, the subcommittee finds that the current benefit structure is not the primary contributor to the current pension crisis; the main culprit is the State’s inability to fund its pension system according to actuarial principal.”

Findings of Gov. Quinn’s Pension Modernization Task Force “The cost to taxpayers of state- funded pension benefits is less than the private sector, and less than public pensions in neighboring states.”

Retirement Costs Neighboring States Indiana 12.85%Iowa14.24% Kentucky7.25%Michigan11.8% Missouri8.71%Wisconsin10.6% “Thus, the Benefits Subcommittee concluded that the future cost of TRS ( 6.63% ) to Illinois is clearly not out of line with other states.” Pension Modernization Task Force

Retirement Cost Comparison PRIVATE SECTOR 10.6% 6.3% Social Security 4.4% Profit Sharing and/or 401K TRS 6.63% PMTF finding: Private Sector retirement costs are more costly than TRS.

The Future Teacher shortages Increased burden on homeowners Increased inequality of education across the state Negative economic effects Poor schools produce a poorly educated work force

Websites Pension Modernization Task Force Center for Tax & Budget Accountability