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updated: 4/19/2012 5:16 AM

Pensions could cost suburban schools millions

It could happen if schools can't absorb costs under pension plan

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  • Gov. Pat Quinn is among top Illinois Democrats who have spoken in favor of having local school districts pay teachers' pension costs.

      Gov. Pat Quinn is among top Illinois Democrats who have spoken in favor of having local school districts pay teachers' pension costs.
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SPRINGFIELD -- Some suburban school leaders say taking over the state's share of teacher retirement costs, a proposal gaining steam in the legislature, would result in them laying off teachers or trying to raise property taxes.

It remains largely unclear how -- or if -- any proposal to transfer the state's share of teachers' pension costs to local schools would work, and no formal proposal is on the table.

But officials almost universally say their schools cannot absorb the added costs, which might amount to 7.6 percent of their payroll, the Illinois Association of School Boards estimates.

"It's an enormous amount of money," said Tony Quagliano, board finance committee leader for Huntley Unit District 158.

District 158 board members plan to discuss a resolution at their meeting today outlining just how much they think the move would hurt. A draft suggests it would cost $2.75 million a year, maybe leading to laying off as many as 60 teachers.

"You have a finite amount of revenue," Quagliano said.

The state has finite revenue, too, which is partly why Gov. Pat Quinn and the two top Democrats in the Illinois General Assembly -- House Speaker Michael Madigan and Senate President John Cullerton -- have backed to some extent the idea of having local schools pick up the future pension costs of teachers.

They argue that because local school boards set salary levels for teachers -- and therefore how big their pensions will be -- districts should pay the employers' share into the teachers' pension funds. After all, they say, Chicago already does it that way.

The state pays a pension contribution for suburban and downstate teachers, and the yearly state payment into employee retirement systems continues to grow, taking up money that could be used for schools, care for the disabled and other services.

But while Quinn might release a specific proposal as soon as this week, no details about how it might work have been decided on.

"It's all based on speculation," said St. Charles Unit District 303 Superintendent Don Schlomann.

He said his district might be facing about $4.8 million in additional costs based on the school board association's 7.6 percent estimate.

State Rep. Elaine Nekritz, a Northbrook Democrat who is working on the details on a panel assembled by Quinn, said the 7.6 percent estimate was a reasonable one. But the cost to local districts could go down, she said, if lawmakers try to reduce pension benefits for teachers and administrators -- an issue that likely will be hotly contested both in Springfield and, if approved, in the courts.

Nekritz said schools should absorb the costs without tax increases, and said lawmakers would try to find ways to make that happen.

That could be impossible, said Wheaton Warrenville Unit District 200 board President Rosemary Swanson, who estimated the cost to her district at $8 million a year.

She said the district would probably have to cover the costs via a combination of fee and tax increases and a reduction in services.

"Our services are teachers," she said.

Maine Township High School District 207 spokesman David Beery estimated the cost to that district at about $5 million.

Community Unit District 300, based in Carpentersville, also estimated costs as high as $5 million, and Chief Financial Officer Cheryl Crates said it would mean reducing school services or negotiating smaller wage increases with employee unions to make up the cost.

And Elgin Area District U46 spokesman Tony Sanders said the school board association estimate meant the district could be facing up to $18 million in additional costs. The district has the most state pension-eligible school employees in Illinois.

Some Illinois House Republicans generally oppose shifting the pension costs to local schools and say property taxes would likely have to increase as the state asks more of schools.

"This does nothing to solve the overall problem. This is just shifting who'll pay for it," said state Rep. Ed Sullivan, a Mundelein Republican.

"The uncertainty of what Madigan, Cullerton and Gov. Quinn want to do is causing quite a bit of chaos in the negotiating and how people will prepare their budgets," he said.

So, for now, local officials have to wait and see what comes out of Springfield, a wait that could last until May 31 or later.

"A lot of this is going to depend on what the state finally comes up with," said Grayslake Elementary District Superintendent Ellen Correll, who estimated the cost to her district at more than $1 million.

With so much uncertainty, she said, "how do you plan for something?"

• Daily Herald staff writers Ryan Voyles and Larissa Chinwah contributed to this story.

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