March 26, 2007
University of Illinois
SUR.07.02 Report on meeting of the SURS Board of Directors, March 8-9, 2007.
Payments by the state to the State Universities Retirement System have been delayed. No payments have been received for February, for example, and previous ones have been late. SURS has had to use other funds to provide on an immediate basis the required payments to the self-managed plans.
SURS received a 15.9% return on investments in 2006, ranking them among the top 10%. This year the return rate is 11.5% as of February 28.
SURS will recommend a 4% increase for its civil service staff and raise by 2 ½% the minimum and maximum for its various classifications. In addition $25K will be available for superior performance bonuses.
At its December meeting the Board adopted a legislative platform. It established six “Legislative Principles” as a basis for evaluating legislative proposals.
- Legislatively promised contributions should not be cut or delayed.
- Current and proposed benefits should be paid as they accrue.
- SURS investments should not be constrained by legislative restrictions, mandates, or directives other than the trustees’ fiduciary duties.
- The primary goal of SURS is to provide financial security for SURS members in retirement.
- Benefits and costs should be equally allocated.
- The financial and operational integrity of SURS must be preserved.
Legislative proposals by SURS include support of a resolution eliminating or reducing the federal Social Security governmental pension offset and windfall elimination provisions. SURS supports an inflation adjustment for pre-1980 retirees; an equity adjustment for pre Jan. 1, 1998 retirees to allow them to receive “mumerous benefit-enhancing changes”; repeal of limitations on earnings after retirement; increasing the statutory schedule for service credit for unused, unpaid sick leave from 1 to 2 years and an increase of the $1,000 death benefit for annuitants to $5,000 and making it nontaxable.
A large number of bills affecting SURS have been introduced in the legislature including one to require 5% of assets be invested in Illinois. HB/SB 750 raising income and corporate taxes and lowering property taxes has been introduced again with some modifications to deal with accountability issues. Jakobsson has introduced HB 823 to increase sick leave service credit to 2 years but has not provided a payment mechanism. The SURS appropriation bill will be heard in the House Appropriations Committee March 14 and in Senate Appropriations II March 28. SB246 would limit the maximum pension to $100K.
Under the Governor’s proposed budget SURS would receive $4.8B bringing it to 88% funding. SURS had not had time to study the governor’s recommendations in detail. Interest on bonds floated previously to pay a portion of SURS shortfall is done by reducing the amount of GRF funds coming to SURS. Thus far the earnings on the funds have exceeded the amount the appropriation is reduced.
Given the growth in SURS, it is proposed to add an Associate Executive Director to reduce the number of Deputy Directors reporting to the Executive Director from at least 8 to 4.
The January/February issue of “Fiscal Focus” published by the State Comptroller is devoted to pension issues and included actions in other states.
Senate SURSMAC Representative