UIC Chapter of SUAA
July 2005 Newsletter - page 2
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UIC Chapter of SUAAJuly 2005 Newsletter - page 2 |
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An "Abnormal Retirement System Funding Environment" in Illinois
Shortly after the conclusion of the disastrous 2005 budget session in Springfield, James Hacking, the Executive Director of the State Universities Retirement System, announced that he would leave Illinois at the end of August to take a position with the Arizona Public Safety Personnel Retirement System.
As quoted by Kate Clements in the Champaign-Urbana News-Gazette Online (June 15, 2005), Hacking in an interview said "The retirement system financing environment [in Arizona] is what I would call normal, in sharp contrast to the extremely abnormal retirement system funding environment here in Illinois." Two of the funds Hacking will direct had more money on hand as of June 30, 2004, than they needed to cover their liabilities, and the third was 92 percent funded, contrasting with SURS's 66 percent.
Future Not Clear
According to Clements, Hacking stated "Senate Bill 27 has settled matters for the immediate future, that is for the next two fiscal years, but the system's financial crisis is out there, and it still needs to be addressed."
Though Hacking had high praise for his own management team and staff, he decried the amount of time required to try to get the state to fulfil its SURS obligations every year. "What happens is that my time and attention…gets absorbed into this annual struggle to get the state to properly fund the system, and every year it's different…as soon as it's over it begins again. And it's going to continue this way. I just don't see any light at the end of the tunnel."
In an interview published a few days later in the on-line State Journal Register, Hacking sharpened his language in responding to questions from AP reporter Christopher Wills. Hacking called the shortchange of the pension system irresponsible and dictated by short-term political considerations. "These are real obligations, and they need to be satisfied."
Barbs Traded
Gubernatorial spokeswoman Becky Carroll responded by accusing Hacking of sitting quietly by as previous lawmakers and governors weakened the system. Her view is shared by virtually no other SURS watchers. Hacking replied that he has been a consistent critic of past shortchanges, and that despite stock market losses, SURS investment gains have averaged 10 percent per year over the past decade.
Though Carroll claims that Blagojevich's borrowing plan has reduced the liabilities of the various pension systems by $8 billion, the figures from those systems suggest that the cost over 40 years will be at least $7 billion more than the borrowing saves. Hacking retorted "The situation just gets worse. It deteriorates with each passing year because policy-makers don't seem to have the political fortitude to step forward and do what really needs to be done."
Others Praise Hacking, Regret His Departure
Hacking leaves his present position with SURS on August 24, and the Board will hire a search firm to conduct a nationwide hunt for a new executive director. The likely interim executive director is said to be Dan Slack, general counsel and associate executive director. J. Fred Giertz, a UIUC professor and SURS board member, praised Hacking for "a great job both internally in terms of managing the organization and making sure that things operate well, and he's been especially good at outreach to the General Assembly and the governor and making sure that the system is well represented in Springfield."
[Sources: Kate Clements, News-Gazette (Champaign, IL) on-line edition, June 15, 2005; Christopher Wills, State Journal Register (Springfield, IL) on-line edition, June 19, 2005].
