Thursday, October 11, 2012

Teachers' union calls for pension system director's resignation

By Jamey Dunn

A statewide teachers’ union is calling for the resignation of the director of the state Teachers’ Retirement System after he commented publicly on proposed pension reforms.

Earlier this month, Richard Ingram, the executive director of the Teachers' Retirement System (TRS), told Crain’s Chicago Business that lawmakers “have to take action” to address the state’s billions in unfunded pension liability. “The time for conversation and debate is, I think, drawing to a close,” Ingram said. Ingram noted that the protection for public pension benefits in the Illinois Constitution has limited what lawmakers can do in terms of scaling back benefits. “Unfortunately, Illinois is in an unusual box compared to some states because of the constitutional language, and that has quite frankly constricted the problem-solving to date. And that’s not to talk down the Constitution. It’s just a practical reality.”

Ingram said that if lawmakers put the required pension contribution into the system each year, the system would remain solvent. However, he said as the required payment grows, the chances of the General Assembly appropriating the full amount each year goes down. “There’s a reasonable expectation that they will not be able to make that full amount.” TRS recently lowered its estimated return on investments from 8.5 percent to 8 percent. The change means that an additional $290 million will be needed next year to make the required pension payment. With the change, the payment for next fiscal year is estimated to be $3.36 billion.

He pointed to cost-of-living adjustments (COLAs) as the most expensive component of the system. “Without question, the single biggest cost factor is the cost-of-living adjustment. That is why when you look at other states, you see that that’s where they focused their changes. ...When the question is, ‘What drives the cost,’ the direct answer is the cost-of-living adjustment.” Recent pensions reform proposals have included reducing COLAs or asking workers to choose between the current 3 percent annual COLA and their retiree health care coverage.

The Illinois Federation of Teachers (IFT) accused Ingram of getting involved in the political fight over pension reforms and asked him to resign his post. “Since 1939, the Illinois Teachers Retirement System (TRS) has done a tremendous public service in stewarding and safeguarding the life savings of the state’s teachers. The state benefits from a system where teachers -- who do not collect Social Security -- can avoid poverty in retirement. But once again, the current executive director of TRS, Dick Ingram, has announced his personal views about diminishing key benefits for existing workers and retirees,” said a statement issued today by the Illinois Federation of Teachers, which represents more than 100,000 teachers and public employees across the state.

This is not the first time Ingram has come under fire for public comments about pension reform. In March, the TRS board of trustees approved a resolution, which according to the TRS’ website, “acknowledges that due to changing circumstances that call into question the General Assembly’s ability to meet the existing plan to fund TRS, drastic changes are needed to maintain the long-term viability of TRS and the other state pension systems.” Ingram faced backlash after the resolution. “All of us at TRS are working to educate our members and the general public about a ‘new reality’ in state government that throws the long-term financial viability of the system into serious doubt. It is not our role at TRS to suggest a solution to this problem,” Ingram wrote in an April letter about the resolution published in the Springfield State-Journal Register.

The Illinois Education Association, which represents about 130,000 teachers, education professionals and college students studying to become teachers, asked Ingram to explain the comments he made to Crain’s. “Members and leaders of the Illinois Education Association were disappointed and angered by the comments executive director Ingram made to Crain's Chicago Business regarding TRS pensions in an interview published last week. There was no advance notice that Mr. Ingram had agreed to the interview and no inkling of what Ingram had said until the article was published,” IEA spokesman Charlie McBarron said in a written statement. “IEA and the other members of the Illinois labor coalition oppose all current proposals for reducing the COLAs for any TRS participant. Coalition members also agree that there should be no changes made to the pensions of those who are already retired.”

“Everything I said to Crain’s is factual and relevant to a discussion about the realities that surround us. I did not advocate for a change in the COLA. I did not propose a change in the COLA. I did respond to questions about a change in the COLA that legislators have been talking about for more than a year and explain why it is part of the proposed legislation.” Ingram said in an email to the IEA. He noted that new revenue is also an option to address the liability. However, he wrote: “The fact remains that right now, there are no legislative proposals for more revenue under active consideration, and there are multiple claims on any incremental revenue that would be generated if there were.”

The IFT was not swayed by his statement. “Mr. Ingram would like the public and other unions to believe his comments are merely an intellectual exercise and are not meant to promote his own preferred solutions to the pension crisis. To this we say, 'We will not be fooled.' The Teachers Retirement System must work for its members, not the politicians, corporate executives or newspapers its leaders may be bullied by. When the fox is guarding the hen house, it is the fox that must go. Mr. Ingram has lost the trust of those he is employed to protect. He should resign from his position as TRS executive director,” the IFT’s statement said.

The IEA did not join the IFT in its call for Ingram to resign. “Regardless of Mr. Ingram's intentions, his comments have created another storm of controversy. IEA members are understandably frustrated by this situation. This is a TRS personnel issue, which will be addressed through the established channels within the TRS board.”

According to a statement from TRS, Ingram does not intend to step down. “Director Ingram has no plans to resign. The TRS Board of Trustees meets on October 26 and will have an opportunity to consider the IFT’s statement,” TRS spokesman Dave Urbanek said in a written statement. “Director Ingram understands full well that questions about the long-term financial health of TRS leads to anxiety and concern among our members. These issues unavoidably create difficult questions about the future and hard discussions about solutions. For the sake of our members, we cannot shy away from these discussions.”

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