Editorial: A backslide on curtailing public pension costs
Fourteen years ago, lawmakers saw a problem: Union contracts across the state specified big automatic pay raises for schoolteachers and administrators in the last years before retirement.
The pay raises resulted in higher pensions for life for the retiree and higher costs in perpetuity for publicly funded pension systems.
If end-of-career raises went over 6%, lawmakers decided in 2005, school districts would have to pay a penalty to the Teachers' Retirement System to cover additional pension costs triggered by the pay hikes. It seemed reasonable, since 6% was - and still is - well above the rate of inflation.
But guess what? School districts continued to pay the 6% raises plus millions of dollars in penalties to TRS, which also came out of taxpayers' pockets. More than a decade later, some suburban school districts still had contracts guaranteeing the end-of-career raises. So last year, lawmakers dropped the limit to 3%.
Now comes the budget signed into law Wednesday by Gov. J.B. Pritzker. There, on pages 349 to 352 of the Budget Implementation Act, is wording doubling the pension-spiking pay limit back to 6%, despite the growing disconnect between those who get public pensions and those who have to pay for them.
Pritzker, in a visit to the Daily Herald on Thursday, pointed out that the agreement reached last week in the legislature is "a highly negotiated budget" but also defended the switch back to 6 percent. Teachers unions like the Illinois Education Association, he explained, claimed the lower threshold prevented deserving teachers from getting bigger pay increases at any point in their careers because if those teachers suddenly decided to retire, their employers would have to pay TRS penalties.
We think that argument is disingenuous.
The truth is there never would have been a legislatively imposed limit if only certain teachers identified for their excellent work got higher pay raises that happened to trigger larger pensions.
Instead, the end-of-career pension spiking happened across the board. The 6% ceiling became a floor. Teachers unions and school boards negotiated contracts that codified it. Public pension costs skyrocketed.
Perhaps the shot at a big pension booster at retirement really does attract some newly minted young teachers to Illinois schools, as the IEA claimed in its heavy lobbying campaign. The union also won minimum teachers' pay of $40,000 by 2025, and we have no argument with that.
But to school boards in the suburbs, where six-figure teacher and administrator salaries aren't unusual, we point out that lawmakers are letting you give end-of-career 6% raises once again. They aren't making you. We urge you not to backslide just because the legislature did.