Illinois Teachers’ Retirement System’s funded status improved slightly to 42% in the fiscal year ended June 30, up from 40.6%, said a Buck Consultants presentation to the board of the $46 billion pension fund Thursday.
The calculation is an average or smoothing of the pension fund’s annual investment gains and losses, Larry Langer, a principal and consulting actuary at Buck, explained to trustees at the retirement system’s Springfield headquarters.
Based on a fair-market calculation of assets, however, the pension plan’s funded status declined to 42.9% at the end of the fiscal year, compared to 44.2% as of June 30, 2014.
Mr. Langer delivered the bad news to trustees during the meeting, stressing that the funded status is “one of the worst in the U.S. due to decades of low state contributions. The average is in the mid-70% range for large public pension plans. Illinois Teachers will not be able to invest its way out of this situation.”
TRS’ accrued liability rose to $108.1 billion in fiscal year 2015 vs. $103.7 billion the prior year. The unfunded liability of the pension fund rose to $62.7 billion as of June 30, from $61.5 billion the previous year.
Based on Buck Consultant’s actuarial valuation, trustees preliminarily approved a state contribution request of $4 billion for fiscal year 2017, a 6.5% increase over the state’s contribution in Illinois’ current budget year. The state legislature is ultimately responsible for determining the annual contribution to each of the state pension funds.