Unfunded liability grows for Illinois teacher pensions


CHICAGO, Oct 25 (Reuters) - Illinois's Teachers' RetirementSystem, the state's biggest public pension fund, said on Fridaythat its unfunded liability grew by 7 percent in the latestfiscal year even as investment returns jumped, driven by chronicunderfunding by the state.

The Teachers' Retirement System (TRS) said its funding gaprose to $55.73 billion as of June 30, up from $52.08 billion atthe end of fiscal 2012 because the state's pension contributionscontinue to fall short of actuarial requirements.

The fund said it had a 12.8 percent return on investments infiscal 2013.

"This increase in the system's unfunded liability, even withgood investment results, is another wake-up call to stateofficials and our members that TRS long-term finances continueto head in the wrong direction," the fund's executive director,Dick Ingram, said in a statement.

TRS gave preliminary approval to a $3.412 billioncontribution for fiscal 2015 using a state statutory formula.The pension system said that a $5.3 billion contribution wouldbe needed to keep the unfunded liability from rising further.

Illinois lawmakers have been struggling to address acollective $100 billion unfunded liability for the state's fiveretirement funds that resulted from years of skipping orskimping on pension payments.

A special legislative panel created in June to addresspension reform did not have a proposed fix ready for lawmakersto take up in the first half of the General Assembly's fallsession, which took place this week. Lawmakers are to return forthe second half of the session on Nov. 5.

Inaction on pensions has helped hammer the state's creditratings to the lowest level among the 50 U.S. states and hasdriven up its borrowing costs in the U.S. municipal bond market.

TRS said it has never received a full actuarial contributionfrom Illinois since it was created in 1939. TRS, the 39thlargest pension system in the United States, serves 389,900teachers, administrators and other school personnel and hadassets of $40.97 billion as of Sept. 30.

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