No big deal to locally fund teacher retirement

Concern has been expressed that local funding of the employer’s contribution to the Teacher Retirement System would place an onerous burden on property taxpayers. This concern is unfounded.

In most suburban school districts about 65 percent of the local property tax revenue is allocated to support the local school districts.

Teachers’ salaries and benefits consume about 25 percent of the annual spending by each school district. Nationally, the percentage ranges from 20 to 30 percent per district, but the average for Illinois school districts is about 25 percent. When the salaries of other certified personnel such as administrators and curriculum directors are included, the total could be as high as 40 to 45 percent of the total expenditures. For discussion purposes, I will use the figure of 45 percent.

If a homeowner’s real estate tax obligation were $7,500, $4,875 would be allocated to support the local school districts; $2,194 of that would be used to pay for salary and benefits of teachers and other certificated personnel.

If the school district contributed 6 percent of the salaries of all certificated personnel to the Teacher Retirement System, the district would need an additional $132 of tax revenue from a taxpayer whose total bill had been $7,500.

The $132 can be deducted from one’s adjusted gross income on his/her federal 1040 income tax return.

If a person’s federal income marginal tax rate were 20 percent, his real increased property tax burden would be about $105 or less than $9 per month.

For those in higher income tax brackets the additional property tax burden would be less.

Teachers and other certificated personnel in Illinois are not allowed to participate in Social Security, so school districts are absolved from paying 6 percent of each certificated employee’s salary to the Social Security Administration. If school districts in Illinois were to assume the obligation to pay 6 percent of each certificated employee’s salary to TRS, the district would pay about the same amount of money to TRS as it would be required to pay to Social Security if certificated employees participated in Social Security.

Donald Brown

Geneva