Two of the largest suburban school districts paid six-figure penalties for giving pension-boosting pay hikes for retiring educators in the 2012-13 school year, eight years after a state law was adopted to discourage schools from doing so.
But another suburban school district, Schaumburg Township Elementary District 54, paid about $25,000 in penalties for the 2012-13 school year — far less than the year before, when it paid nearly half a million dollars, according to records from the state’s Teachers’ Retirement System.
The state limits annual raises for end-of-career teachers and administrators to 6 percent. School boards are free to pay more but must reimburse the retirement system for extra pension costs that arise from the higher pay. The bigger an employee’s salary is in the last years of his or her career, the bigger the annual pension will be.
Since the 6 percent limit went into effect in 2005, many school districts have taken steps to curtail what they owe in penalties, but some are still hit hard, according to records.
The highest payments in the suburbs were:
• Elgin Area Unit District U-46: $135,392.59
• Community Unit District 300: $103,869.83
• Community School District 59: $86,882.42
• Aurora East Unit School District 131: $86.851.73
• Wheeling Township District 21: $71,374.33
However, that’s an overall reduction from the previous year, when half a dozen suburban school districts each paid more than $100,000 in penalties.
District 54 Assistant Superintendent Ric King said it’s nice to pay less, but said the payments are ultimately “out of our control.”
He gave the example of an employee leaving in December who was owed a lump sum for pay that otherwise would have been spread out over the next year’s summer break. If that boosts the annual pay raise over 6 percent, the school district must pay the penalty.
District 54 was charged more than $1 million in penalties over the previous three years, some of it stemming from raises as high as 22 percent given over several consecutive years to a handful of top administrators.
Last year, the Illinois Supreme Court declined to hear a lawsuit from District 54 challenging $586,000 in penalties. The district had argued unsuccessfully that agreements to give the raises were in place before the 2005 law.
The most recent retirement system records show Elgin Area Unit District 46, one of the biggest school districts in the state, paid the most in the suburbs last year. Spokesman Pat Mogge said the school district is trying to cut out the penalty payments to the retirement system.
Mogge said new union contracts have provisions limiting pay raises to 6 percent or less.
“We should be receiving less penalty invoices moving forward,” Mogge said.
Officials from District 300 did not return phone calls seeking comment.
Pensions will be on the minds of Illinois lawmakers as they head down the homestretch of this year’s legislative session, where they face a pension fund debt of at least $100 billion.
State Rep. Elaine Nekritz, a Northbrook Democrat, couldn’t say for sure what caused the decrease in penalty charges. She thinks after eight years under the law requiring penalties, more school districts are writing contracts that eliminate big pension-boosting raises for those about to retire.
“I can guess that it might be because existing collective bargaining agreements are expiring and districts are being more watchful over those kinds of end-of-career bumps,” she said.