Springfield, Ill. – The Teachers’ Retirement System’s (TRS) recent reduction in its expected rate of return on investments is just another example of why respondents to a recent poll of Illinois voters overwhelmingly believe the state is headed in the wrong direction, according to State Sen. Sue Rezin (R-Morris).
On Sept. 21, TRS lowered its expected rate of return on investments for Illinois’ downstate teachers’ pension system, increasing the state’s anticipated Fiscal Year 2014 payment for the retirement system by almost $300 million. TRS also approved other changes in actuarial assumptions that will add another $200 million to next year’s payment, which together with an already expected increase of $200 million and the investment return hike, brings the total payment increase to almost $700 million.
TRS based the adjusted rate on a report recently issued by an actuarial firm hired to review all assumptions, including the investment return, and on the recommendations of investment consultants. As a result, the TRS Board of Trustees reduced assumptions from the 8.5 percent used since 1997, to 8 percent.
The board’s decision to adjust its estimated rates of return will drive the state’s unfunded pension liability up by billions of dollars, and increase the state’s yearly obligation to the systems by hundreds of millions of dollars. Advocates for comprehensive state retiree pension reform say the board’s action underscores Illinois’ grim pension realities—noting that even though TRS lowered its average rate of return to 8 percent, some financial groups, such as Moody’s Investors Service, believe the rate should have been lowered even further to match current market conditions. This would have had an ever greater impact on the state’s bottom line.
On the heels of the TRS decision, Illinois’ well-documented pension woes prompted reaction from The Wall Street Journal, which mocked a suggestion by Gov. Pat Quinn that there could be a possible federal guarantee of the state’s pension debt.
According to the WSJ editors: “Sooner or later, we knew it would come to this since the Democrats who are running Illinois into the ground can’t bring themselves to oppose union demands. Illinois now has some $8 billion in current debts outstanding and taxpayers are on the hook for more than $200 billion in unfunded retirement costs for government workers. By some estimates, the system could be the first in the nation to go broke, as early as 2018.”
This news would come as little surprise to many Illinois voters if the results of a recent poll conducted by the Paul Simon Public Policy Institute are any indication. The Institute, based out of Southern Illinois University at Carbondale, found that after polling 1,261 registered voters between Sept. 4 and Sept. 10, a whopping 69.9% of respondents believe the state is off track, with a mere 19.6% saying they believe Illinois is headed in a positive direction.
Voters’ dissatisfaction extends to Gov. Quinn, with almost 50% of those polled expressing moderate to strong disapproval of the Governor’s job performance.
The 2012 Simon Poll focused mainly on the state’s ethical climate and political reform, and the results underscore the voters’ perception of Illinois as a particularly corrupt state. Fifty-eight percent of respondents said they believe Illinois’ state government is more corrupt than governments in other states, with 76.8% contending that corruption in Illinois government is widespread.
And while 35.8% of people polled think their local government is less corrupt than in other areas of the state, or at least about the same (41.6%), when comparing Chicago residents’ response to voters from the suburbs or downstate, Chicago voters were substantially more likely to say their local government was more corrupt. In fact, 41.2% of Chicago voters polled believe their local government is more corrupt, as compared with 16.9% in suburban Illinois and 7.5% downstate.
Other interesting results from the poll:
• Interestingly, a large majority (62.3%) of voters polled expressed their belief that there is significant corruption in Illinois business.
• Another grim result revealed that the voters have only 50.4% confidence in the honesty of the state’s election process. This is reportedly the same level of confidence in their elections expressed by Iranians and Czechs in response to a 2008 Gallup World Survey of 134 countries.
• Voters polled were presented with a number of areas in which financial or conflict-of-interest disclosure could be mandated in Illinois. Though a majority of respondents expressed some level of desire to require more disclosure, the highest percentage of “very important” responses came in at 84.9% who want public disclosure if a candidate was reported to the State Legislative Ethics Committee for alleged ethics violations.
• Almost 80 percent of voters polled were somewhat or strongly in favor of imposing term limits on state lawmakers, and 77.9% favor to some degree limiting how long a legislator can serve in a leadership position — Speaker of the House, President of the Senate, etc.
The state’s continually high unemployment rate likely contributes to the pervasive public dissatisfaction with state government.
For years, Illinois has struggled with above average unemployment rates, a disturbing trend that doesn’t appear to be ending anytime soon. In August, the Land of Lincoln’s unemployment rate rose to 9.1 percent – one point higher than the national average of 8.1 percent for the same month. In addition, it marked the third consecutive month the jobless rate rose in Illinois.
As alarming as those statistics are, they only represent those who are unemployed and who’ve been searching for work in the past month. When you include those working part-time who are seeking full-time work, and unemployed individuals who’ve become discouraged and stopped looking for jobs, the number is much higher. That figure – the so-called “underemployment rate” – stood at 16.5 percent in Illinois during the second quarter of this year and has remained above 10 percent for several years.
Statistics also show high underemployment is causing rising poverty in Illinois. According to the new American Community Survey, 1.9 million Illinoisans were living below the federal poverty rate in 2011, a jump of 150,000 from 2010. That’s more than the entire populations of Wyoming, Vermont and North Dakota.
Sen. Rezin said an initiative launched by Gov. Quinn earlier this month to help employ veterans can also be beneficial to businesses. The Illinois Hires Heroes Consortium (IHHC) is an alliance of business owners who pledge to implement a series of veteran recruitment, training and retention practices. For businesses that participate in the consortium, they are rewarded through no cost recruitment of veterans and the ability to exclusively display the IHHC logo, which is a sign to veterans and consumers that the company practices “veteran-friendly” policies. IHHC members are also featured on websites and materials from the Illinois Department of Employment Security (IDES) and the Illinois Department of Veterans’ Affairs (IDVA). For more information, visit the IHHC website at www.illinoishiresheroes.com.
Around the district last week, Sen. Rezin met with LaSalle County retired teachers on Tuesday, spoke at the Streator Chamber Legislative Breakfast on Tuesday, and met with a group of seventh grade students at Parkside School in Peru to discuss the legislative process in Illinois.