Illinois taxpayers contributed three times as much money to the Teachers’ Retirement System, or TRS, last year than did participating teachers, even as the makeup of board tasked with overseeing the state’s largest pension fund tilted more heavily in favor of teacher union representation.
The influence of the unions – particularly the Illinois Education Association, or IEA – within TRS is significant.
“It’s … about clout, they want a say how money is managed and how things are run,” said Jon Bauman, former executive director of TRS.
The Teachers’ Retirement System manages $38 billion in assets and has an unfunded liability of $56 billion. The system’s money comes from contributions from taxpayers at both the state and local level as well as from educators through payroll deductions.
The TRS board is composed of 13 members: Six are elected by active or retired members of TRS and six are appointed by the governor. The board’s president is the state superintendent for education.
The idea behind dividing the board in this manner is to ensure that the interests of taxpayers as well as educators are represented.
But the balance of power began to change under the administration of former Gov. Rod Blagojevich, who appointed Marcia Boone Campbell, secretary-treasurer of the Illinois Federation of Teachers, or IFT, to the board.
IFT supported Blagojevich in his first and second gubernatorial runs.
Campbell’s appointment gave members of teacher unions a majority of members on the board. Gov. Pat Quinn has since reappointed Campbell.
And the balance of power at TRS has continued to shift in favor of the unions.
Only four of the board’s six gubernatorial positions are now filled; Campbell holds one of these positions.
This gives union representatives a clear majority – seven of 11 board seats.
“It curious to me that they haven’t moved with a greater sense of urgency on filling positions on that board. After all it is a board that does important work and needs to be at full strength,” Bauman said.
Bauman added that IEA dominates the election of teacher trustees, and the smaller IFT simply doesn’t have enough members in suburban and downstate schools served by TRS to win such an election. So the IFT is reliant on the governor to make an appointment.
Board members elected by educators are often officials in the labor union or longtime union activists.
The IEA recommended three members to the TRS board of trustees in 2011, and aided them in their re-election by circulating petitions.
It is virtually impossible for anyone to get elected to the board without the IEA’s support, Bauman said.
Arguably, the TRS board makes decisions that affect Illinois fiscal policy more than any other public body besides the General Assembly.
The board chooses which firms invest pension money, makes an annual request for funds from the General Assembly based on what it believes future investment returns will be and oversees how TRS functions as an agency.
“Having a union controlled board leads to major problems … they are always looking after the union,” said Bob Williams, president of State Budget Solutions. “They don’t have to worry about the bills coming due. As long as they can keep kicking the can forward and as long as the bond ratings don’t totally collapse, they can get benefits now and pass the bills off into the future.”
“Unions should have a voice on the board. But they shouldn’t have an overwhelming majority or even a majority. They should have a minority. The taxpayers should be in the majority on the board.”
IEA officials declined to be interviewed for this article.
When Bauman was executive director, AFSCME sought to unionize the TRS workforce.
Bauman hired a law firm to fight the effort. Ultimately, the workers voted overwhelmingly not to join a union.
But this action may or may not have laid the groundwork for his 2009 dismissal from TRS.
One thing is certain: IEA leaders wanted him out.
In 2009, then-IEA president Ken Swanson had this to say:
“TRS needs to break with the past to get on with the future. If Mr. Bauman is unwilling to resign immediately, I call upon the TRS trustees to remove him at this week’s meeting.”
Bauman quit at that meeting.
Swanson said he didn’t like how Bauman handled a scandal within TRS in which an appointed board member was found guilty of corruption charges.
Federal authorities investigated the matter and Bauman has never been charged with any wrongdoing.
Bauman said he believes IEA exerted pressure to have him effectively fired. Some previous TRS executive directors came from leadership ranks of the IEA, but that was not the case for Bauman, nor is it for current TRS Executive Director Richard Ingram.
Officially, TRS is supposed to remain neutral on pending legislation, but TRS board members have been known to share their point of view.
For example, Robert Lyons, one of the elected annuitant members of TRS’s board, wrote an online article in August of this year saying: “The more money that the General Assembly seeks to save, the more that they diminish the growth of our benefits; the more certain the bill is unconstitutional.”
Similarly, Cinda Klickna, who now heads up IEA, wrote an opinion column for Illinois Issues in 2011:
“… legislation that would have diminished pensions for active participants in the five state retirement systems was proposed in the spring 2011 legislative session. … [it] is clearly unconstitutional. Should lawmakers pass the legislation, an expensive court fight would ensue, which the state is sure to lose.”
Although Klickna is also a TRS trustee, she identified herself in the article only as president of the IEA.
According to documents obtained by the Illinois News Network, Klickna asked TRS staff to fact check her article before publication.
TRS spokesman Dave Urbanek confirmed that TRS staff was used in this manner at the direction of Ingram.
Since 2011, three gubernatorial appointees resigned their positions on the board. Only one resignation involved a move out of state. And two of those positions have not been filled. One seat hasn't been filled for 32 months and the other seat has been vacant for 14 months.
Gov. Pat Quinn’s office did not respond to repeated calls regarding why he has not filled seats on the board.
TRS has requested $3.4 billion taxpayer funds from the state to cover the “employer” contribution to the pension system for the fiscal year starting in July.