Moody's Likes TRS Pension Move. But There's A Catch.
It's a rare occurrence of late: A credit rating agency saying something positive about Illinois' finances. But the comment published Tuesday by Moody's Investor Service was tempered.
Illinois could end up having to put an additional half billion dollars into one of its pension funds next year.
As the name suggests, the Teachers Retirement System is the retirement benefits fund for all Illinois public school teachers outside of Chicago.
At actuaries' recommendation, the TRS board just voted to lower how much it expects to make on its investments. The state has to make up the difference.
That's the action Moody's Investor Service is applauding.
But Moody's also echoes Gov. Bruce Rauner in noting that the unexpected cost puts even more fiscal pressure on the state. Illinois went a year without any budget, and even now has only a partial spending plan in place. A gulf between spending and revenues is building a deficit. Adding in another half billion dollars on top of that sets the stage for deeper cuts to programs, or a bigger tax hike, in the not-too-distant future.
Moody's report also indicates that the additional money to TRS is not near enough. Even with it, Illinois' long term pension debt -- already the highest in the nation -- will grow. Moody's says if Illinois wanted to curb that, the state would have to put in another $1.5 billion to TRS next year.
TRS is the largest of the state's five retirement systems; other funds manage investments for state employees', legislators', judges' and university employees' pensions.