What would teacher pension shift do to your taxes?
When and if the Illinois legislature gets the state out of the business of funding teachers' pensions, it's going to be up to suburban and downstate property owners to pick up most — if not all — of the slack.
That means the average suburban homeowner could pay about $165 more a year in property taxes if the full burden was shifted today, based on an analysis of Teachers' Retirement System data and property tax records of numerous suburban school districts in six counties. But the average homeowner in some suburban school districts could see increases of as much as $270 a year.
Suburban school districts with the highest state contributions toward educators' pensions. A proposal in Springfield would shift that cost onto local schools.
Elgin Area Dist. U-46: $14,388,053.32
Indian Prairie Unit Dist. 204: $12,476,698.11
Naperville Unit Dist. 203: $9,097,532.44
Palatine-Schaumburg HS Dist. 211: $7,595,649.59
Northwest HS Dist. 214: $7,504,934.89
Schaumburg Elem. Dist. 54: $7,114,027.70
Community Unit Dist. 300: $6,872,646.94
Wheaton Warrenville Dist. 200: $6,558,726.12
St. Charles Unit Dist. 303: $5,891,975.94
Palatine Elem. Dist. 15: $5,641,554.91
Source: Illinois Teachers' Retirement System
Teacher pension costs in your school district and who pays them — See our interactive map.
Keep in mind that the only "cost-shift" proposal before the General Assembly calls for gradually transferring the state's pension responsibilities to local schools over more than a decade, so a tax increase would not hit all at once. And cuts in retirement benefits could decrease the amount that has to be paid. A competing pension bill introduced in the state Senate does not include plans to shift funding responsibilities at all.
Proponents of the tax-shift plan say schools could take on the extra costs without passing them to local taxpayers.
"The goal is not to raise taxes with the (shift); it's to absorb it without raising taxes," said state Rep. Elaine Nekritz.
Others say that's unlikely.
Plans so far don't include any Illinois income tax reduction to make up for the pension obligations the state would no longer have to pay.
The bill supported by Nekritz calls for the state to shift its annual teacher pension obligations to school districts over time. In 2012, the state's regular pension costs for teachers were about $765 million. The state would not pass along its unfunded liability — the backlog of debt that has accumulated from years of not fully funding public pensions. The state paid more than $1.5 billion toward that debt last year, according to TRS officials, and still owes billions more.
"(School districts) were not the ones who created the unfunded liability," Nekritz said. "The state is where it was created, and the state ought to pay for that."
No proposals have included specifics about how the cost-shift would affect homeowners' annual property tax bills.
Most school officials believe making schools responsible for future pension costs will lead them to raise taxes or cut services. School boards can raise property taxes by 5 percent a year or the rate of inflation, whichever is lower. They also can raise taxes by referendum.
"We could probably maintain for about a year or two, but we'd either have to cut or go to voters for an operating fund increase," said Wheaton Warrenville Unit District 200 Superintendent Brian Harris. "You either have to increase revenues or decrease expenditures."
An analysis shows the state paid about $211.5 million last year toward teacher pensions for 92 suburban school districts in six counties, while teachers paid nearly $260 million themselves. School districts, using property tax revenue, covered another $16 million, according to TRS records.
On the higher end of the scale among local schools, the state paid nearly $14.4 million toward retirement benefits for educators in Elgin Area School District U-46 and nearly $12.5 million for teachers at Indian Prairie Unit District 204 in Naperville and Aurora. The state paid less than $200,000 to fund benefits for teachers at some small suburban school districts. These are the costs that would be passed to local school districts.
While not exact, one way to determine the potential toll on taxpayers is to take the state's pension payment on behalf of each school district and add it to the total property taxes collected by that school district last year. TRS provided the state pension payment data through a Freedom of Information Act request and school property tax extensions are on most county clerks' websites.
By adjusting the property assessment formula with the additional property tax revenue needed from the school district, it's possible to determine the resulting increase in taxes to the average $250,000 suburban house.
For instance, the owner of a $250,000 house in District 200 paid about $3,390 in property taxes last year to the school district. If taxpayers there picked up the state's pension obligation for teachers of almost $6.6 million last year, that homeowner would then have to pay roughly $3,560 in property taxes, a $170 increase.
"I don't see anyone in support of shifting the state obligation back to the taxpayer in our community," Harris said. "Because of the mood about government, I think any increase is significant."
But not as significant as what would have happened to homeowners in some Grayslake or West Chicago school districts. The owners of a $250,000 house in Grayslake Elementary District 46 and Grayslake High School District 127 would see their property taxes increase about $270 in this scenario, from $6,300 paid to the two school districts to an estimated $6,570.
The owner of a $250,000 house in West Chicago Elementary District 33 and Community High School District 94 would see an increase of roughly $240, according to the analysis.
"For West Chicago, that seems high," said Heather Karlson, a West Chicago resident who home-schools her children. "You might have people moving out of the district."
That's happening in other suburbs even without the cost-shift. Round Lake Beach resident Kathryn Krause said she and her family are moving out of the area later this month because of property taxes the family pays to districts 127 and 46.
"We're moving to a house twice the size and our taxes are only going up $400 a year," she said. "I don't have a problem with the schools, just the taxes."
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