State Continues to Explore Pension Obligation Bonds
The Office of the Illinois Governor continues to examine using pension obligation bonds to help balance the budget in fiscal year 2009, which will begin on July 1, 2008. TRS has worked with the Governor’s office and other public pension systems to examine if bonded indebtedness should replace some of the state pension funds’ current unfunded liability. The ultimate goal of a pension obligation bond is to borrow money at a rate that is lower than what the system can earn on its investments. The State of Illinois used this tactic in 2003, and TRS was successful in outpacing interest costs. However, these scenarios are always risky because there is no guarantee of repeated successes.
TRS will continue discussions with the Governor’s office and to protect the long-term stability of the fund over short-term objectives. TRS will never support a proposal that does not provide stable and responsible funding. At this point, no language has been introduced, and the state has not published any details.
As more information is received from the General Assembly, TRS will update this area online, send e-mail notifications to members, or publish updates in the July Topics & Report.
TRS Holds Annual Stakeholder Meeting
On January 25, 2008, the Legislative Committee of the Teachers' Retirement System held its annual stakeholder meeting. This well-attended event hosted representatives of organizations representing active and retired teachers, school districts, school administrators, state agencies, and general advocacy groups. The forum was an opportunity for TRS to provide information regarding the advantages of defined benefit plans, the success of TRS investments, and the upcoming vote regarding the Constitutional Convention. In addition, Colm Brewer, the Budget Director for the Illinois Teachers Retirement Health Insurance Program, a division of the Department of Healthcare and Family Services, provided a presentation on current funding levels and a history of the TRIP program.
Following the forum, the TRS Legislative Committee discussed their concerns regarding a vote on the Constitutional Convention. Due to concerns that a Constitutional Convention could delay important issues, such as revenue and school funding, and could cause considerable confusion regarding current constitutional protection of pension benefits, the Board adopted a resolution opposing the convening of a Constitutional Convention.
Click on the links below to view the presentations (in PDF format) discussed during the forum.
Divestment Laws
The Teachers’ Retirement System is prohibited by state law from investing in companies that do business in Sudan and the ban will soon extend to investments in Iran. Follow the hyperlink below for the full divestment story.
TRS Complies with Divestment Laws
The Illinois General Assembly is currently in the 95th General Assembly. Click here to see the schedule. Follow the hyperlinked text 'schedule' under the House or Senate column to view the respective chamber's calendars.
Click here for information about Defined Benefit Plans and Defined Contribution Plans
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