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posted: 1/5/2013 8:00 AM

Why shifting pension costs to schools is so controversial

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  • A "Pension Promise" sign is seen as Illinois state union members and supporters rally in support for fair pension reform in the rotundra at the Illinois State Capitol Thursday, Jan. 3, 2013 in Springfield Ill. (AP Photo/Seth Perlman)

      A "Pension Promise" sign is seen as Illinois state union members and supporters rally in support for fair pension reform in the rotundra at the Illinois State Capitol Thursday, Jan. 3, 2013 in Springfield Ill. (AP Photo/Seth Perlman)

 
 

A proposal to hand the state's future pension costs over to local school districts became such a sticking point that Gov. Pat Quinn and legislative leaders agreed to set it aside to try to get some movement toward a pension deal.

But it could come back, depending what lawmakers do in the next few days to try to reduce the state's pension obligations.

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A look at data from the Teachers' Retirement System shows why it's so controversial.

Last year, the state paid almost $765 million toward retirement benefits for suburban and downstate educators participating in the teacher retirement program. Of that, more than $200 million went to cover pension obligations at 89 suburban school districts in six counties.

Those are the costs that would be pushed to school districts if the legislature approved a cost-shift proposal, leading to staunch opposition from suburban and downstate lawmakers of both parties who say schools would have to raise taxes or cut programs or staff.

The amounts range from as much as $14.4 million for Elgin Area School District U-46 and $12.5 million for Indian Prairie Unit District 204 in Naperville and Aurora to less than $200,000 in school districts like Winfield Elementary District 34, Rosemont Elementary District 78 and Antioch's Grass Lake Elementary District 36.

Proponents of the cost shift say it would be phased in over many years and that other pension benefits costs would reduce the amounts owed.

Last year, school districts statewide chipped in $58 million toward retirement benefits, according to data supplied by TRS.

Educators across the state contributed almost $940 million toward their pensions last year, which represented 53.3 percent of the nearly $1.8 billion contributed for the program's annual regular costs.

That does not include unfunded liabilities. Under a cost-shift plan, the state would continue to cover those unfunded liability costs that essentially amounted to roughly double the state's regular costs last year, TRS officials said.

State Rep. Elaine Nekritz, a Northbrook Democrat and vocal backer of having local schools pay more, said she'd consider voting for a proposal that doesn't contain a provision calling on school districts to take on those costs. But she'd prefer it did.

"I still believe strongly the cost shift achieves really important policy goals," she said.

Other pension reform proponents believe relieving the state's obligations for funding teacher pensions is important, but understand the decision to remove that aspect from potential legislation in an attempt to agree on something that could be voted on within days.

"They will eventually have to tackle the cost shift. It's such a big part of the solution," predicted John Carpenter, chief operating officer of the Chicagoland Area Chamber of Commerce, a group that has called on legislators to pass pension reform.

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