Taxpayers have contributed $7 billion more to TRS than required by 1995 Pension funding law.

One of the more common myths surrounding pension funding is the claim that the state (i.e. taxpayers) has not done its part and in fact has not made required payments often “skipping” payments.

This is patently not true as the following chart shows definitively.

Per Senate Bill 533 (SB-533) August 1994 – Public Act 88-0593
TRS – State Pension Contributions to TRS
FY 1996 Estimated 1996-2012 vs. Actual 1996-2012
In millions of dollars
 COLUMN A  COLUMN B  COLUMN C  COLUMN D
YEAR  Actual State Contrib.  Required Contributions in 1996  Per Actuaries  Excess State Over 1996 Projected  Extra At 8.5% ROI Compounded
1996                  389                      341                   48                   14
1997                  421                      409                   12                     3
1998                  503                      482                   21                     5
1999                  636                      561                   75                   17
2000                  731                      644                   87                   18
2001                  821                      734                   87                   17
2002                  907                      829                   78                   14
2003              1,021                      932                   89                   15
2004              5,489                   1,043             4,446                 669
2005              1,055                   1,155              (100)                 (14)
2006                  658                   1,275              (617)                 (79)
2007                  854                   1,401              (547)                 (64)
2008              1,172                   1,536              (364)                 (40)
2009              1,604                   1,680                 (76)                   (8)
2010              2,252                   1,832                 420                   39
2011              2,326                   1,905                 421                   36
2012              2,561                   2,044                 517                   44
TOTAL>>            23,400                18,803             4,597                 686
Interest on POB              2,512             2,512
Total Taxpayer Cost            25,912                18,803             7,109
SOURCE: TRS Actuarial Reports 1994, 2005 and 2012

Notice that in 17 years of contributions (1996 thru 2012) the state has been short in only five of those 17 years based upon the payment schedule presented to the taxpayers in 1995 (fiscal year 1996). And three of those five were because of state law tied to pension Bond issuance.

The taxpayer over-contribution is $4.5 billion plus the $2.5 billion or so in interest paid on the $17 billion in Pension Obligation Bonds issued by Blagojevich in 2004 and Quinn in 2010 and 2011.

So what happened between the time we were told we needed $18 billion in state contributions in 1995 and 2012?

What happened is the politicians of both parties got together with the IEA (Illinois Education Association) and the IFT (Illinois Federation of Teachers) and passed a slew of new legislation giving teachers more and more pension and retirement benefits thereby driving up the taxpayers cost enormously.

The biggest benefit was the new pension calculation that increased the pension benefits up to 30% for new retirees. This was passed by the legislature in 1998 and signed into law by Republican Governor Jim Edgar. For those of you with poor memories Championnews publisher Jack Roeser ran for Governor in the Republican primary against Edgar in 1994 and if he had won this law, and many of the others, would have never passed and our pension problems would be much less than they are now.

Some of other retirement benefits passed into law since 1995 were retirement with full pension at age 54 instead of 58, 2 years sick leave allowed to be used as “work” years for pension calculation purposes, ERO (Early Retirement Option), end-of-career 25% salary increase in the last 4 years of service, State Employee 5 & 5 Early Retirement Incentive Act, etc. etc.

So what is clear is what taxpayers were told in 1995 was not true. We over-contribute by $7 billion and are still told we have not done enough. I say we have done more than enough it is time for the employees to do more – much more.

Teachers in Ohio now pay 14% for their pensions instead of 8%. How about the millionaires in waiting do the same thing here in Illinois? That and eliminate the COLA for the already retired millionaires and the automatic end-of-career 25% salary increases and we have a start on legitimate pension reform.

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