The Illinois Teachers
Retirement System, the state's largest pension fund which is only 41.5% funded: cut its
existing future returns assumption from 7.5% to 7.0% (which was previously
lowered from 8.0% in 2014. The state government would be on the hook to make up the
difference caused by lower assumed investment rate of return, estimated to cost an extra $400 million to
$500 million a year.Illinois Teachers Retirement
Sadly, in a world of low returns, there is no simple solution; in fact, it is an "unsolvable math problem" in a world of Zero interest rates(ZIRP) and Negative interest rates(NIRP), and as the Chicago Tribune said "Taxpayers would be hit either way; the question was whether it would be in the short term or long term."
Illinois decided to take the short-term hit on the budget, and thus taxes, instead of kicking the can further down the road while the severity of the problem dramatically increased.
Will Georgetown learn from others mistakes?
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