Madigan’s Latest

15 May
Rep. Madigan has been the main proponent of making school districts pay more into TRS. Well, he has found a way to start that ball rolling and it could be as early as this week. If he has his way, House Bill 3637 will be amended to take the Personal Property Tax Replacement Fund (PPTRF) dollars that would normally go to school districts and other local governmental bodies and apply that to fund TRS.

This is a tax that the State of Illinois collects from corporations in lieu of corporate personal property taxes that were eliminated in the 1970s. This amount is around $1 billion or more and varies from year to year. The state in turn distributes the funds to school districts, library districts, counties and municipalities, park districts, etc. according to a formula set by law back in the 1970s.

What Madigan is proposing is to take that money and using that to pay part (or all depending on the amendment) of the state’s share for funding TRS. He has taken HB3637 which is a “shell” bill (one without much substance so it can be amended at will) and there are now three proposed amendments to that bill. All three amendments were filed by the Speaker himself.

The first amendment would take the PPTRF funds of over $536 million from school districts outside of the City of Chicago and apply that to TRS. The second amendment would take over $982 million from ALL taxing districts out side of the City of Chicago. And the third amendment would take all the PPTRF for the entire state of Illinois — including Chicago — to the tune of over $1.4 billion and allocate that to the TRS as the state contribution.

Here is the language proposed for each amendment:
Amendment no. 1 — The sum of $536,379,100, or so much thereof as may be necessary and only from amounts allocable to school districts other than those located wholly within the boundaries of the City of Chicago, is appropriated from the Personal Property Tax Replacement Fund to the Teachers’ Retirement System of the State of Illinois for the State’s contribution.

Amendment no. 2 — The sum of $982,356,435, or so much thereof as may be necessary and only from amounts allocable to taxing districts other than those located wholly within the boundaries of the City of Chicago, is appropriated from the Personal Property Tax Replacement Fund to the Teachers’ Retirement System of the State of Illinois for the State’s contribution.

Amendment no. 3 — The sum of $1,401,377,760, or so much thereof as may be necessary, is appropriated from the Personal Property Tax Replacement Fund to the Teachers’ Retirement System of the State of Illinois for the State’s contribution.

There will be major opposition to these proposals. Amendment 3 will be definitely opposed by the City of Chicago who has their own deficits in regards to pension funding and would not relish paying into a fund for downstate teachers. Amendment 2 and 3 will be opposed by the over 6,000-plus units of government in the state of Illinois. It was just last year that a bill was passed to pay the salaries of the superintendents of the ROEs in the amount of $13 million from the PPTRF over the objections of the Municipal League and others.

That leaves Amendment 1 as a real possibility. The amount proposed would be about 2/3 of the state’s share for FY13 (not including the payments to make up for past underfunding). Both Madigan and Gov. Quinn have stated that they want to see school districts pay much more into the TRS and the state pay less. Yet this would certainly cause a serious financial burden on school districts across the state if such a huge chunk is taken at one time. Most districts are already strapped for funds as it is.

The discussion in committee may reveal more about the intent of the Speaker in regards to shifting the pension funding to school districts. He is well aware that others have said any such shift should be phased in rather than dropped on school districts such as he has proposed.

There is a hearing this afternoon at 2:30 p.m. Wednesday (May 16) in Room 114 in the Capitol. This is expected to be a webcast through the House of Representatives Live Video/Audio feed found at this link http://ilga.gov/house/audvid.asp

Lou Ann Jacobs

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