How teachers get paid more in retirement

Pensions were meant to provide an income stream during retirement.

They're doing that and more among former Illinois educators, who in many cases are making more in retirement than in most of the years they spent in the classroom.

Nowhere is that more apparent than in Leyden High School District 212, where nearly 55 percent of the district's retired teachers and administrators are making more than the average of their four highest-paid years, the salary benchmark used by the Illinois Teachers' Retirement System to determine starting pension amounts.

Those 97 Leyden retirees who are making more than their final average salary receive pensions averaging $102,474 for a year, a Daily Herald analysis of TRS data shows.

“That's a function of people living longer,” said Nick Polyak, the district's superintendent. “Our wages are competitive regionally, but we're all watching the bottom line because money is tighter these days.”

The average age of those Leyden District 212 retirees is 77, and they have been collecting pensions an average of 19 years, according to the research.

Among 93 suburban school districts, here are the 10 districts with the highest percentage of retirees with pensions exceeding the average of their four highest-paid years.

• Leyden High School District 212: 54.8%

• Maine Township High School District 207: 50.9%

• Northwest High School District 214: 49.1%

• Roselle Elementary District 12: 46.3%

• Arlington Heights Elementary District 25: 44.2%

• Mount Prospect Elementary District 57: 44.1%

• River Trails Elementary District 26: 44.1%

• DuPage High School District 88: 42.2%

• Crystal Lake High School District 155: 41.5%

• Villa Park Elementary District 45: 40%

Illinois pension laws have changed in recent years to reduce the chances of retirees making more than they collected in salary, but some experts are worried the effects of those new policies won't be felt for decades.

In the meantime, in more than half the 93 suburban school districts examined in the analysis, at least 25 percent of district retirees are making more than the average of their highest salaries.

Maine Township High School District 207, like Leyden, has more than half its retired educators getting more from their pensions than they did from the average of their highest salaries. The 275 retirees who topped their former average salaries are getting pensions averaging $92,701 a year, the analysis shows.

Generous retirement packages of the past are to blame for these current benefits, area school district administrators said.

At Grant High School District 124 in Lake County, 22 of the district's 59 retirees average pensions that exceed their final average salaries by $17,168. Those retirees' average annual pension is $96,063 this year, according to the TRS data.

Superintendent Christine Sefcik called the district's previous retirement incentives “very generous” and said the current administration and school board would like to eliminate any retirement incentives in the future.

“We recognize public sentiment in that regard and the intent legislators had in implementing a cap on increases in retirement years,” Sefcik said. “We attempt to be very diligent with the hard-earned funds we are given from our local community.”

She said the district has taken care not to exceed the 6 percent cap on salary hikes that triggers state penalties that local taxpayers must pay. Sefcik also said the district's teacher salaries are “below” state average.

Statewide, the gap between some educators' pensions and what they made when they were drawing salaries is growing. In 2012, 22,521 of the state's 88,166 retired educators got pensions higher than their final average salaries. Those retirees' pensions topped their average salaries by $8,271, for a total of $186 million statewide.

This year, 30,357 of the state's 100,689 retired educators got pensions higher than their average highest pay while working. The pensions averaged $9,674 above the final average salaries of those retirees, for a total of nearly $294 million.

“Who would think that's a common occurrence? That's a new one on me,” said Sandi Jacobs, senior vice president for state and district policy at the National Council on Teacher Quality, a Washington, D.C.-based nonpartisan education policy research group. “Where it gets complicated is when you look at the total cost and sustainability issues.”

Jacobs co-authored a report on teacher pensions nationwide that shows Illinois with the highest unfunded liability per pupil in any retirement system in the country. She believes the best option is moving public pension programs to programs similar to a 401(k) where contributions are set rather than the benefit.

Many critics of Illinois pension policies point to the annual compounded 3 percent cost-of-living increase retired teachers receive, as well as a low retirement age and no cap on salaries, all of which helped inflate pension amounts.

Most of that was addressed in 2010 when legislators created a new tier of benefits for public workers. The annual cost-of-living adjustment is tied to inflation and capped, the retirement age was increased to 67 and lawmakers limited how much of an educator's salary could be counted toward his or her retirement benefit.

In the future, that will cut down on the number of retired educators making more from pensions than from their highest average salaries, but it also created inequities among teachers, with newer employees subsidizing funding shortfalls for older employees, TRS officials said.

TRS is funded by employee contributions of 9.4 percent of their salaries and the rest is made up through investment returns and state funding. The state has a history of underfunding its obligation to the system, which has resulted in a $62.7 billion shortfall.

“Illinois is in this situation because the state hasn't met its obligation to the system,” said Charlie McBarron, a spokesman for the Illinois Education Association, a union that represents many of the state's teachers. “Going forward, the state needs to continue to meet its obligations and, as has been suggested, (reschedule the debt payments) which would ease the stress on the system.”

But others believe teachers and retired educators should be willing to reduce their benefits in order to lighten the burden on taxpayers.

“(Teachers) deserve a secure retirement and they should be comfortable, but we need to figure out a way this works so we all have retirement security,” said Madeleine Doubek, chief operating officer of Chicago-based Reboot Illinois, a voter-advocacy digital media group. “As it stands now, when their property taxes go up, they're going to have an easier time paying for it than their neighbors who aren't teachers.”

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Contact Jake at jgriffin@dailyherald.com or (847) 427-4602.