State Representative Daniel Biss with Erika Lindley, executive director of ED-RED, a lobbying group for suburban public school districts; Dick Ingram, executive director of the Teachers’ Retirement System (TRS) and  Louis Kosiba, executive director of the Illinois Municipal Retirement Fund. Rep. Biss says the pension problem will be resovled by ‘shared pain.’ RoundTable photo

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With pension reform still one of the hottest topics in Springfield and in the state, State Representative Daniel Biss held a town hall meeting about pensions on Aug. 16 at Temple Beth Israel in Skokie. About 200 persons attended the meeting, titled “The Long Road to Pension Reform: What Is ‘Cost Shift’ and Why Does It Matter?” Also in attendance were representatives of three organizations that have “skin” in public pensions: Erika Lindley, executive director of ED-RED, a lobbying group for suburban public school districts; Louis Kosiba, executive director of the Illinois Municipal Retirement Fund; and Dick Ingram, executive director of the Teachers’ Retirement System (TRS).

“The depth of our debt is more serious than [that of] almost any other state,” said Rep. Biss. “It’s hard to imagine a solution that doesn’t have shared pain. … What’s in everybody’s best interest is to minimize the broadly shared pain.”

One plan is to shift to local school districts the “normal,” or current year cost of funding TRS. Doing that would cost the two public school districts in Evanston an additional $6 million per year, according to the districts’ estimates.

Rep. Biss shaped his support for this move in the form of a question: “Does it make sense for school districts to set the salary that determines the pension and then send along the bill to the state?” He also said the cost shift could be phased in over a few years.

Ms. Lindley said the state “is still in control of the benefit packages. … [The school districts are] setting the salary. The state is setting the rules.” She said ED-RED’s position is that this is “not a good time for this to happen,” but the organization is talking with local school districts to see how it can help protect them or make the shift more bearable. “The longer we can stretch this out the better it will be.”

Mr. Ingram said TRS is “neutral on the pension shift.” He added that TRS had passed a resolution outlining some concerns and desires for accountability for the state. “We can no longer count on the state. … We need to be able to tell the 25-year-old teacher in Illinois that the promises made will be kept.”

Mr. Ingram added that the state should also feel it has “skin in the game. … It helps the state to have educated children.”

The town hall meeting, the most recent in Rep. Biss’s series of “critical issues” meetings, took place the evening before the General Assembly was to vote on ways to address its pension crisis. At present, Illinois has the lowest-rated state pension system, with an unfunded liability of $83 billion.

On Aug. 23, Moody’s Investors Service issued a warning that the state’s general obligation bond rating, already A2, could be even more negatively affected by the failure of the legislature to take meaningful action. In a sector comment Moody’s said, “Inaction on the state’s pension liabilities will further strain this lowest-rated U.S. state’s finances.”