Illinois Legislator Concerned about TRS Investment in Alternatives

December 21, 2011 ( - Illinois House Republican Leader Tom Cross called for a meeting of the House Personnel and Pensions Committee in the next month to examine a new investment strategy by the Illinois Teachers' Retirement System (TRS).

The new strategy directs approximately one third of TRS’ $37.8 billion in assets to alternative investments such as private equity and hedge funds. Crain’s Chicago Business reports that Cross made the request in a letter to Democratic House Speaker Michael Madigan on Tuesday, saying the TRS plan to boost investment income could backfire. 

“If the TRS investment strategy fails, the result would place far more financial strain on the already burdened resources of the state and the TRS pension fund’s ability to meet its financial obligations to annuitants and future retirees,” the December 20 letter said, according to Crain’s Chicago Business.  

Cross called for assembling the executive directors and investment officers of all the major state-funded pension funds to discuss the issue at the meeting.  

“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,” he said in the letter. 

In an e-mail, TRS said, “Teachers’ Retirement System officials will be happy to meet with legislators anywhere, anytime, to explain its investment strategy and decisions.”  

The letter from Cross followed a Crain’s story that showed the TRS allocation to alternative investments is more than the average for public pensions. Cross was quoted in that story expressing concern about the soundness of the strategy, the news report said.