Proposal would have schools take on future pension costs, not debt
SPRINGFIELD — As suburban school officials remain skittish about the idea of paying more toward teachers' retirements, Illinois Senate President John Cullerton said a proposal he's considering would spare local districts the cost of covering the immense pension debt the state has racked up.
“The underfunding of the past, we're not asking them to do that,” said Cullerton, a powerful Chicago Democrat.
But the proposal would require local schools to pick up the actual cost of a teacher's pension going forward — an estimated $800 million among all the suburban and downstate schools this year. Chicago schools fund their own pension program.
The details, though — including how much individual school districts would have to pay — remain under review as lawmakers work the numbers and eventually look for political support.
The suburban members of Gov. Pat Quinn's pension committee say they've met with actuaries and other groups recently to try to get a grasp on what exactly the move could cost individual school districts — a possible sign the proposal is a serious one.
Pension policy includes an immense number of variables, and tweaking any of them could affect schools' expenses drastically.
“Right now, I'm trying to figure out how this whole thing will work,” said state Rep. Darlene Senger, a Naperville Republican on Quinn's panel.
“This is complicated stuff,” Cullerton said.
How much the proposal would cost each of nearly 870 school districts would vary widely, depending on size and pay levels. A suburban district that pays much bigger salaries than a downstate district likely would have to pay more.
“I would say it's cause and effect,” Cullerton said.
The National Conference of State Legislatures says all 50 states have a statewide pension system for teachers, with the districts picking up the employer costs in more than two-thirds of them.
Quinn told reporters Friday that he's serious about pension reform and encouraged lawmakers not to wait until after the November election.
“When solving a problem, sometimes everybody has to get a haircut,” Quinn said. “But they're not going to get scalped.”
Shifting pension costs to local schools is a tactic to reduce pension expenses to the state, which has accumulated massive debt at least in part by failing to fully pay its share of pension costs some years.
Cullerton says shifting pension responsibility to schools could be phased in over several years, or timed to when a district negotiates its next contract with teachers, an opportunity to account for the new costs in a new multiyear deal.
Part of the overall logic behind the idea is that Chicago schools — and city property taxpayers by extension — already pay the employers' share of teacher pensions there, while the state is chipping in $2.4 billion this year toward suburban and downstate teacher pensions, if you include expenses to make up for past underfunding.
“It's blatantly unfair,” Cullerton said.
Costs are only expected to rise, and along with the increasing cost of health care for the poor, are crippling the general state budget. That's why pension reform ideas are being taken seriously by lawmakers now.
“We're coming to understand just how big of a liability we have,” state Sen. Michael Noland, an Elgin Democrat and member of Quinn's pension panel, said of a recent meeting with actuaries.
But suburban school officials already are pushing back against the plan being floated by some top Democrats, saying state cuts to bus funding and other programs in recent years mean suburban schools are already picking up more costs.
“All that burden is already coming back on the local districts,” Grayslake Elementary District 46 Superintendent Ellen Correll said last week. “We just can't take it anymore.”
Illinois House Republican Leader Tom Cross of Oswego has championed a proposal that would either force teachers to pay more out of their checks or enter a less lucrative system if they want to keep their pensions. That idea has stalled in the face of criticism from suburban teachers arguing that their benefits shouldn't be cut because the state hasn't been keeping up with its obligations.
For now, though, details on the Democratic plan remain scant. Quinn's Feb. 22 budget address might bring some clarity, but consensus could be tough to find as lawmakers face tough elections in 2012 and might be wary of taking controversial votes.
Senger said she talked over the idea preliminarily with local districts, but so far, she can't help them with many details.
“We don't know ourselves,” she said.