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Article updated: 1/3/2013 9:15 AM

Retired teachers balk at proposal to shift pension costs

By James Fuller

Retired teachers revived their detention slips for two suburban lawmakers Wednesday night in Aurora as the former instructors rebuffed a plan to shift the cost of Illinois' underfunded teacher pensions to local school districts.

State Rep. Elaine Nekritz, a Northbrook Democrat, joined state Rep. Linda Chapa LaVia, an Aurora Democrat, at East Aurora High School to brainstorm solutions to the state's underfunded teacher pensions conundrum.

Nekritz is the one of the chief sponsors of a bill that would partly address the problem by shifting more of the pension burden onto local school districts. That idea has local taxpayers fearing a storm of local tax increase referendums by local school boards.

Retired teachers and local Aurora residents had their own ideas for Nekritz and Chapa LaVia on Wednesday. All the ideas carried a theme similar to battle recently seen with the fiscal cliff tug-of-war in Congress. Teachers said Illinois doesn't have a pension problem; it has a revenue problem. To earn more revenue the state must either create new taxes or close tax loopholes for the wealthy, they said.

Some of the ideas that earned favorable comment by Nekritz and Chapa LaVia included ending a $85 million tax subsidy for the CME Group. CME operates the Chicago Mercantile Exchange and, along with Sears, threatened to leave Illinois in 2011 during a temporary increase in corporate taxes. Nekritz said she agreed that, despite CME's threats, it's doubtful it would leave the state if the subsidy were rescinded.

The state lawmakers also expressed interest in a plan to create a $1 financial transactions tax. This would, for example, charge $1 for every futures contract purchase and $1 for every sale. Such transactions typically involve thousands of dollars of value being exchanged.

Even with those ideas in the mix, Nekritz said she wasn't backing away from her cost-shift proposal. Audience members said her plan will result in poor districts having even less money. But Nekritz said the cost shift would restore some balance in the funding between poor and relatively wealthy school districts.

She said general state aid, used to help fund poorer districts, is only about $4.3 billion, compared with the $7 billion the state puts into teacher pension funding. Nekritz said that is an unfair balance because the pension funds act as a subsidy for wealthier districts, which pay their teachers much higher salaries without worrying about the long-term pension burden.

State lawmakers are in a final lame-duck session before newly elected legislators are sworn in. Both Chapa LaVia and Nekritz agreed it is unlikely any pension legislation will see a vote before the new elected officials take office.

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