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|
|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.