Illinois Is Broke
In October of 2011, the organization “Illinois Is Broke” posted on their website a 2:30 minute video of a middle-aged woman in a classroom talking about teacher pensions in Illinois. In short, the video’s message is that TRS is running out of money and that there will not be enough money in TRS to pay active teachers once they are set to retire. The action requested is to contact legislators to get them to vote for Senate Bill 512, the Civic Committee’s pension reform proposal.
The video’s script does not accurately describe the finances of Teachers’ Retirement System. TRS is not going broke and will have enough money to pay pensions for decades.
The video’s script says: “This is how much money we have in the fund,” and a graphic showing “$31 billion” pops up.
That number reflects the assets held by TRS last year. The current assets, thanks to a 24 percent return on investment for fiscal year 2011, total $37.5 billion.
The script says: “This is how much we need to pay our current retirees.” A graphic of “$49 billion” pops up.
This is an incomplete statement. What’s not said is that the $49 billion is the estimate of what’s needed to pay “current retirees” every year for the next 30 years. The actual cost of teacher pensions this year is $4.5 billion.
The script then says: “This is how much we need to pay people like you.” A graphic of “$27 billion” pops up.
Again, what’s not said is that this number reflects a 30-year estimate for teachers who are not even eligible for a benefit.
The script barely mentions current revenues collected by TRS. Over the last two years, TRS revenue totaled $17.3 billion, from teachers, school districts, state government and investments. TRS benefit checks in the last two years totaled $8 billion.
TRS currently carries an unfunded liability of $44 billion, but this is a number that never comes due at one point in time because only current retirees are eligible to be paid. TRS has carried an unfunded liability since at least 1953 and has never missed a pension check.
Director of Outreach
Teachers' Retirement System of the State of Illinois
Illinois IS Broke