80% of state teacher pension payments going towards unfunded liability
SPRINGFIELD, Ill. (WRSP) —
Seven billion dollars of the state's budget goes towards pensions for the fiscal year 2017; Four million of that is for the Teachers Retirement System (TRS). However, 80 percent of that funding goes towards unfunded liabilities, while only 20 percent actually goes towards pension payments accumulated throughout the year.
That unfunded liability comes from the state not paying the full tab, which has been done for years. For the fiscal year 2017, the state should pay $6 billion, rather than only $4 billion, if they want to stop accruing that unfunded liability.
Since the inception of state pensions for teachers in 1939, according to TRS, the state has never fully funded the pension system.
"They're paying their legal obligation," said Ed Wollet of the Illinois Retired Teachers Association. “The amount that's required by law to be paid, but there's also an actuarial amount that's due to be paid if they're going to take care of the unfunded liability.”
Pensions are a part of the compensation package for educators and the pension system for teachers in Illinois is one of the best in the country. Those advocating for those benefits say that's so Illinois can keep the best and brightest here in the state to benefit the education system. They also say that's not happening anymore.
"If they're thinking about taking a teaching job in the state of Illinois and they know the pension benefits when they retire are bad or terrible, they're going to be looking for jobs in other states and it's fairly obvious that's happening," said Dave Davison of the Illinois Retired Teachers Association.
These pension payments are a legal duty of the state of Illinois laid out in the state constitution. Retired teachers won't lose pensions, but the systems may not be as beneficial for current and future teachers.
Also, it will be the taxpayers picking up the tab on the unfunded liability, according to TRS. They say that's the state's obligation.
We reached out to Governor Bruce Rauner's office for comment, but they have not responded yet.