With just 15 days left in the spring session of the Illinois state legislature, local school officials are nervously looking toward Springfield. They are concerned about Gov. Pat Quinn’s proposal to shift the employer portion of teacher pension costs from the state to local school districts.
Although Quinn’s proposal has not yet been formally introduced as part of any legislation, it is known to be one of the ideas legislative leaders are considering as they try to craft a package to control pension costs that the cash-strapped state cannot meet.
Local school superintendents say that if local districts were forced to pick up more teacher pension costs it would mean teacher layoffs, budget cuts and perhaps higher property taxes.
“I am very concerned that the governor will shift TRS employer pension cost to school districts,” said Riverside-Brookfield High School District 208 Superintendent Kevin Skinkis. “This would cause Riverside-Brookfield financial distress, and it would force us to have to make some serious reductions to a budget that is already carrying a deficit.”
Elementary school superintendents are also concerned.
“Since we don’t have any specifics from Springfield it’s hard to truly anticipate the impact in actual dollar terms, but without question the cumulative effect year after year after year would be substantial to District 96 and all other school districts in the state,” said Riverside District 96 Superintendent Jonathan Lamberson.
Currently local school districts pay 0.58 percent of teacher salaries into the Teacher Retirement System (TRS). Teachers contribute 9.4 percent of their salaries to the pension fund.
The TRS is currently seriously underfunded because the state has not made all of its required contributions for a number of years.
“The teachers have made all their payments to the TRS, the districts have made all their payments. It’s the state that hasn’t kept up their end of the bargain,” said Brookfield-Lyons District 103 Superintendent Michael Warner.
Brooke Anderson, the press secretary for Governor Quinn, said any shift of future pension costs to local school districts would not happen all at once.
“This would be a shift that would be phased in so that they could plan for it,” Anderson said.
Anderson emphasized that Quinn’s proposal is part of a plan to tackle Illinois’ pension obligations.
“The governor proposed a very comprehensive plan that includes a number of components to eliminate the unfunded liability over 30 years, which would do tremendous good for our state, financially and economically,” Anderson said. “It’s a comprehensive proposal that would repair the pension system. If we do nothing, we risk the stability and sustainability of the pension system.”
Neil Pellicci, superintendent of Komarek School District 94 in North Riverside, said shifting the pension burden to local districts would cost Komarek hundreds of thousands of dollars per year.
“It’s going to cost our district about $232,000 more than it did before,” said Pellicci. That’s based on the 7.65 percent of salary figure that is being talked about. District 94 currently contributes about $16,000 directly to TRS.”
Quinn’s proposal to shift costs would also affect the pension system for state university professors and community college teachers.
“Only 22 percent of the $5.1 million pension costs this year are for actual state employees,” Anderson said.
Anderson said Quinn believes that local districts should be responsible for the pension costs of their employees.
“The governor believes that the school districts, the universities and the community colleges should have a stake in the contracts that they negotiate,” Anderson said. “Essentially they’re negotiating contracts they don’t have a stake in and then they’re giving the bill to the state.”
The Illinois Association of School Boards (IASB) is actively lobbying against the idea.
“We’ve estimated that it’s going to cost districts 7.65 percent of their payroll,” said Susan Hilton the director of government relations of the IASB. “We’re estimating the statewide impact could be 20,000 teachers – 20,000 teachers could be laid off.”
Hilton said the cost-shift proposal could be part of a big comprehensive pension package at the end of the legislative session.
“I would think that a lot of individual legislators might not support it if that was the only piece in a piece of legislation, but you never know what the entire budget package is going to look like at the end of the session,” Hilton said. “It’s absolutely a possibility. It’s been discussed by [State Senate] President Cullerton, [House] Speaker [Michael] Madigan and the governor so it’s definitely a possibility.”
Cullerton, Madigan and Quinn are all Chicago Democrats, and some Chicagoans have argued that it is unfair that state taxes from Chicago residents help fund the TRS, which covers only Illinois public school teachers who teach outside of Chicago.
The pensions of Chicago Public Schools teachers are funded by Chicago taxpayers, so Chicago taxpayers are paying for two different teacher retirement programs.
State Rep. Michael Zalewski (D-Riverside) said he is keeping an open mind on the issue. He said this week that the focus in the legislature is on reforming the pension system and that the cost shifting proposal is a secondary concern.
“The focus is on ensuring that the [pension] funds are stabilized through a mix of increasing the contributions for current employees, reducing the cost-of-living increases [for retirees] and somehow dealing with the retirement age,” Zalewski said. “These are the sort of core principles that you would say everybody realizes we have to manage in the next two weeks to get a bill passed. The downshifting of the cost to locals is something that I think is secondary in nature to what we are trying to accomplish.”
Zalewski has said that it is an accident of history that the state is responsible for the employer portion of teacher pensions in Illinois.
“No one has a reason why the state picks up the teacher pension contribution other than during the Depression the only people who had money was the state,” Zalewski said. “That’s the way it was set up and it’s always worked that way.”
The state may no longer be able to afford to fund teacher pensions, Zalewski said.
“We’re living in an austerity environment, and government needs to be shrunk and programs need to be reorganized,” Zalewski said. “There’s a very good case to be made that we should think about that shift.”
