HEADLINES : Illinois, Michigan, Ohio
From Michigan to Illinois to Ohio, teacher pension problems -- and changes -- fuel political debate
As dire as conditions are for the Michigan Public Employee Retirement System, be advised it could be worse.
Just look at Illinois.
Teacher and public-employee pensions are in the news nationwide, and Michigan's are not unique. Across the country, pension funds are suffering from the same confluence of factors, including rising health-care costs, falling returns on investment, lax oversight and more.
It is very difficult to directly compare public-employee pensions; individual states each have their own rules, and funds, cautioned Gary Olson, a former Senate Fiscal Agency director currently preparing a paper on Michigan's school-employee pension bind. But, in general, elsewhere in the Midwest, states are taking the same steps Michigan is deploying in trying to shore up underfunded pension systems: increasing contributions and changing eligibility rules.
bridge-logo-for-mlive.jpgNews and Analysis from The Center for Michigan
Illinois splits its educators into two retirement accounts. One, run by the city of Chicago, covers teachers there. The other, the Illinois Teachers Retirement System, covers educators across the rest of Illinois -- and was recently declared on the road to insolvency by 2030. The Illinois system is mostly funded by the state, and, in March, the TRS board approved a resolution declaring "the fiscal situation of the State has deteriorated to the point that the Board no longer has confidence that the State will be able to meet its existing funding obligations to TRS," explained Sarah Wetmore, research director of the Civic Federation.
"Pension contributions are crowding out other spending at the state level -- just as they are doing at the (school district) level in Michigan," Wetmore said, adding that the total state pension contribution in fiscal 2012 will be $7.6 billion or 19.3 percent of state general fund dollars. This is an increase from $526 million in 1996.
Anxieties over the shortfalls have led to some reforms. Employees hired after Jan. 1, 2011, are in a different tier of benefits, for example.