Pension debacle will cost taxpayers dearly

The Feb. 12 article “Pension proposal would spare schools” was somewhat misleading. Any solution to the state’s teacher pension problem has to affect the schools because it would add substantially to the already high cost of public education. How much? Let’s do the math.

The latest estimate of total current expenditures per Illinois public school student for 2011-12 is $12,638, according to a December 2011 National Education Association report. When other relevant education costs are included, this adds another $684 per student, bringing the estimated total to $13,052. Since teachers and employers already contribute about $1 billion a year to the Teachers Retirement System, about $476 of this $13,052 per pupil is already allocated to teacher pensions. Adding the state portion of the $800 million annual cost of suburban and downstate teacher pensions would add another $381 per student, bringing the total to $13,433. Of the state’s $85.6 billion pension liability, only $46 billion applies to the Teachers Retirement System. This liability could be relieved by issuing a $46 billion 25-year bond at an interest rate of 4 percent, which would cost $2.9 billion a year. Spreading this cost among 2.1 million students would add another $1,386 to the cost per student, producing a grand total of $14,819.

Thus, if the teacher pension problem is resolved simply by levying higher taxes, the total cost per student this year would be $14,819, and teacher pension costs would account for 15 percent, or $2,243, of that total — $476 for existing contributions, $381 for ongoing contributions, and $1,386 for unfunded liability.

Far from being “spared,” taxpayers would still be well and truly hosed if the state legislature and local school districts don’t find some way of reducing public pension costs.

George A. Clowes

Mount Prospect

The Heartland Institute

Chicago