I just saw something interesting, and potentially disturbing, on the Illinois Teachers' Retirement System website.
The front page still has a notice that reads:
“A new law addressing Illinois’ teacher shortage problem takes effect with the 2018-2019 school year. Retired TRS members can teach 120 days or 600 hours without affecting their pensions. This change is in effect through the 2019-20 school year.”
In theory, pensions are for retired people, not people earning money while working. Is that how this law works?
Is the 120-day or 600-hour restriction cumulative? Or can teachers teach for 120 days, take some time off, and then start teaching again?
More importantly, what about this “teacher shortage problem?”
Pension funds are financial institutions, like banks and insurance companies. They take money in the door, and put it to work.
Pension funds and insurance companies are a little bit different than banks in one key way: banks can be subject to “run on the bank” issues. If counterparties lose confidence in banks, and withdraw large sums of money, other counterparties may join the party, worried that if they don’t, they will be at the end of the line when nothing is left.
Pensions and insurance companies, however, can be subject to different types of “death spirals” if new money stops coming in the door.
What is happening to the ability to inspire young people to pursue careers as teachers, firefighters and cops in states like Illinois, Connecticut, New Jersey and Kentucky—to name a few—where public pension funds are in very bad shape?
In turn, what is happening to the ability of the pension funds for those employees to depend on future contributions from new and future participants?
Happy Thanksgiving!