Cross wants to examine pension investment strategy

SPRINGFIELD — Illinois House Republican Leader Tom Cross has asked lawmakers to examine a new high-risk, high-return investment strategy by the state’s teachers’ pension system to make sure it won’t cause further economic strain.

Crain’s Chicago Business reports Cross sent a letter to House Speaker Michael Madigan seeking a meeting next month to review high-return but high-risk investments by the Teachers Retirement System.

“If the TRS investment strategy fails, the result would place far more financial strain on the already burdened resources of the state,” Cross wrote in the Dec. 20 letter. He wants the matter reviewed by the Personnel and Pensions Committee.

The Oswego Republican’s letter came a day after Crain’s reported that about one-third of the retirement system’s $38 billion portfolio has been placed in alternative investments such as private equity and hedge funds. The newspaper reported the system’s reliance on alternative funds is more than the average for public pension systems.

All of Illinois’ pension systems combined are underfunded by an estimated $80 billion largely because of years of neglect and failure by state officials to make the necessary contributions.

At the same time, the economic downturn continues to batter state finances, and the government is behind on paying its bills by at least $5 billion despite an income tax hike in January.

“Although the General Assembly is not in the business of giving investment advice, I believe it is an issue worth examining due to the impact this could have on every aspect of government,” Cross wrote.

A statement from the Teachers Retirement system indicated that agency officials “will be happy to meet with legislators anywhere, anytime, to explain ... investment strategy and decisions.”