Go smooth yourself

Several months ago, the SJ-R published a letter to the editor I submitted regarding the deepening crisis with state funded pensions in Illinois.

A week later the paper published a reply from Dave Urbanek, spokesman for the Teachers Retirement System (TRS), one of the larger components of our decrepit pension systems. Though well written, I thought the points raised were irrelevant; but I was flattered that I rated a response, and the figures cited piqued my interest enough to check out TRS’s website, which has a wealth of information available. The fiscal reports supported his statements without refuting mine.

I checked back last week to peruse the TRS Comprehensive Annual Financial Report. Reading the financial summary, either side could claim vindication. I suspect Urbanek would point to the 13.5% (gross of fees) return on the TRS portfolio for 2010 and its balance increase of $2.5 billion. However, those numbers are after $6.8 billion in contributions and investment income. As liabilities increased from $73.0 to 77.3 billion, the reported funds available slipped to 48.4% of the actuarial requirement.

To understand the chilling part, however, you have to read between the lines. Beginning in 2009, with massive losses in the pension funds, Public Act 96-0043 was passed, requiring pension fund values to be “smoothed” over five years. Coincidentally, this then understated those massive losses. How understated? From the actuarial section:

“As of the June 30, 2010 valuation the total net deferral is a $6,115,308,000 loss”

So “actuarial” now means “pretend.” While TRS reported $37.4 billion in “actuarial” assets, market value was $31.3 billion. Using these real numbers, TRS funding has dropped from an abysmal 56% in 2008 (as the the market was crashing), to 40% — despite above average 2010 returns.

It’s not looking good, but at least we’ll know what to tell pensioners when this train wreck arrives:

“You got smoothed!”

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3 Responses to Go smooth yourself

  1. Younger Brother says:

    This also gives us a useful label for the officials who play games with future-liability figures: smoothies.

    Not as catchy as my preference — “convicted felon” — but it’s a start! (Welcome back.)

    — JN

  2. Angel says:

    No need to post this as a comment … I just wanted to contact you to say that I hope you add to your blog soon a widget thingy or something soon so I can subscribe to your blog via RSS. Or is there one and I didn’t see it?

    I live in Quincy, Illinois, so I’m interested in your state political stuff as well as the nutritional stuff. I know a few people here who would probably like to follow your blog as well. Quincy tends to be on the conservative side. :)

    Now that The Younger Brother is back from the Low Carb Cruise, I can ask him about setting up the RSS feed. I’ve had a couple of people comment that they’ve subscribed, but I don’t know if that means RSS.

    Good to know about Quincy in case I need a sanity check.

    — JN

  3. Tony Dickson says:

    Just wait ’til everybody sees the light and eats a no-sugar low carb diet and they start living to 90 or 100, then the retirement system will really be screwed. 😉

    Maybe we can pay for it with the money Medicare saves on insulin and viagra.

    — JN

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