State leaders want schools to pay pension tab – Wilmette Life

21 Feb

The three top Democrats who set the state’s legislative agenda are talking up the idea of shifting responsibility for billions of dollars of pension contributions from the state to local school districts — a seismic shift that has suburban school officials and educators on high alert.

Illinois Gov. Patrick Quinn, House Speaker Michael Madigan and Senate President John Cullerton’s plan would move the “employer” contributions for teachers and school administrators to their actual employers: Local school districts.

Even if the change is phased in over time, the shift likely would mean higher property taxes or budget reductions elsewhere, if school boards are not allowed to raise property taxes beyond the tax cap.

Quinn has said the pension contributions should be considered part of educators’ total compensation.

“It would be a hardship, that is for sure,” said Barry Bolek, assistant superintendent for finance in Township High School District 113, which includes Deerfield and Highland Park high schools.

“Where are you going to find $8 million to pay for a brand new expenditure that you did not have before?” he asked. “You have got to come up with that money somewhere.

“Since the majority of our budget goes toward salaries and benefits, you have to go into that area,” Bolek added. “You can’t all of a sudden say you are going to have to stop heating the school buildings.”

The dollars aren’t chump change.

Illinois taxpayers paid $11 million into the Teachers’ Retirement System in fiscal 2011 for teachers and administrators in Glenbrook District 225, which covers Glenbrook North and Glenbrook South, according to the district’s Comprehensive Financial Report for the year.

State taxpayers picked up another $10 million-plus on behalf of New Trier High School employees; $8.5 million for teachers and administrators in District 113 and $6.4 million for teachers and administrators at Evanston Township High School, according to those districts’ annual financial reports.

State contributions are now 23 percent of pension-eligible payroll. State contributions have nearly tripled in the past five years as the state has racheted up payments to comply with a 1995 ramp-up plan. The plan was enacted to force fiscal discipline on Illinois lawmakers after decades of skipping or short-changing payments. Higher personnel costs also have contributed to the increase in the retirement system payments.

One idea being floated would require school district’s to pay 8 percent.

The Teachers’ Retirement System accounts for one-half of the state’s $85 billion in pension debt. State contributions to all five state-funded pension plans next year will grow by one billion, gobbling up all of the projected increase in state revenue.

“I don’t think it’s out of line to ask the local districts, ‘Why don’t you contribute to this cause?’” House Speaker Madigan was quoted as saying during a Jan. 24 appearance in DuPage County. “These are your employees. I never found anybody who could tell me why the State of Illinois stepped up one day and said, ‘OK school districts, we’ll just pick up all your pension costs.’”

Teachers and school administrators who participate in the Teachers’ Retirement System pay 9.4 percent of their pay into the retirement fund.

Madigan also has cited the inherent unfairness of requiring Chicago taxpayers to pay for the pensions of suburban and Downstate educators through state taxes, when they also contribute heavily to the retirement system for Chicago educators.

With no obligation to pay for school pensions, suburban school boards commonly gave large pay boosts to teachers and administrators before retirement to maximize their pension benefits. That practice has been phased out with newer contracts because the state capped pension-eligible pay raises at 6 percent a year, unless local school boards were wiling to pick up the additional pension-related tab.

The pension shift concept, while ominous for property taxpayers, may be more popular with current teachers and administrators than Senate Bill 512, a proposal from the Civic Committee of the Commercial Club of Chicago that has been fiercely fought by teachers’ unions and other public employee groups, who have banded together as We Are One Illinois.

Under that proposal, current employees would have three options: Keep their current benefits but pay higher contributions; accept reduced benefits and keep their contributions about the same, or shift to a self-managed plan similar to a 401(k) plan.

Opponents, including some legislators contend the proposal violates the state constitutional requirement that pension benefits not be “diminished or impaired.”

Participants in the Teachers’ Retirement System generally aren’t eligible for Social Security benefits.

via State leaders want schools to pay pension tab – Wilmette Life.

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