Schools predict local burdens from pension plan
The pension reform plan that was debated in the state legislature Tuesday angers suburban school district officials who are frustrated that the financial burden could fall to them and, perhaps ultimately, local taxpayers.
Though earlier pieces of legislation that could cost local governments have often been successfully averted, that's no reason to assume the same will be true in this case, Barrington Unit District 220 board President Brian Battle said.
"The problem we have with the Illinois legislature is its proclivity to act quickly without a lot of public input," Battle said. "You can never predict the speed at which legislation gets introduced and acted upon."
Schaumburg Township Elementary District 54 board President Teresa Huber said she'd prefer the whole issue be shelved until the fall, despite how earnestly her district supports sustainable pension reform.
"I can't imagine, if everyone had the facts, who would be for this," Huber said. "I don't know if the general public is even aware of this and how it could affect them. Maybe during the fall session there would be more time and more opportunity for input from all stakeholders."
But other school officials interviewed Tuesday had a wait-and-see approach to legislative debate over pension reform, which could take hundreds of thousands of dollars out of their budgets starting in the 2013-2014 school year.
The reform would require school districts to pay an additional 1 percent of their payrolls into the pension system that year and each year after for the next six years. After that, the annual increase would be 0.5 percent for an undetermined number of years.
School officials say it's premature to say what the consequences of this added cost would be on property taxes, class sizes and teacher contract negotiations.
But there will be consequences, District 300's Chief Financial Officer Cheryl Crates said.
"The 1 percent increase will cost the district about $800,000 in the first year, alone," she said, and it will compound after that.
To make up for the additional expense, Crates said the district would need to look at reducing spending.
Currently, the district contributes about 5 percent to the Teachers' Retirement System, with employees putting in 4.5 percent.
But once the teachers contract ends on June 30, the district might not be able to pay teachers' shares any longer, Crates said. Teachers then would need to pay the full contributions themselves, Crates said.
That will make negotiating a teachers contract more difficult, Crates said.
"There will be less money to give but more money needed to supplement the state's money," Crates said.
In the long run, however, reform will add stability to the pension program, she said.
"The state owed and failed to pay so long that now there's a big hole," Crates said. "The changes will pay back the whole fund and that's the good part of this. It is a fairly good compromise and everybody has to give a little for it to work."
Naperville Unit District 203 Chief Financial Officer Dave Zager said the school district was expecting this financial burden, and has already budgeted for it.
"The financial projection in our 2012-13 budget document had assumed we would have to pay this. Actually, the 1 percent a year is less than I put in the projection. I had 2 percent per year until reaching full normal cost," he said. "So the 1 percent will mean we have to absorb the cost at a lesser rate, though ultimately, we have to absorb the whole thing, taking twice as long to get to full normal cost."
Zager said the legislation would not mean a tax increase, since the district can't go beyond the tax cap without a referendum.
"Eventually, it could mean a budget cut, but a lot will depend on contract negotiations," Zager said. "We will have to deal with whatever comes our way, be it now or in the fall. Certainly the problem of the long-standing underfunding of the pension system isn't going away."
Glenbard High School District 87 Superintendent Mike Meissen said a 1 percent increase in staff costs will cost about $600,000 a year.
"That would be a significant and substantial increase in our expenditures that our board would need to make some real difficult decisions on how to meet our budget parameters, and provide high-quality programs for our students," Meissen said.
Glenbard's Assistant Superintendent of Business Chris McClain said the teachers make their 9.4 percent contributions to their pensions, and the topic of the schools paying more has already come up with the teacher's union.
"When there's significant financial impacts like that, the parties are gonna have to get back together and have discussions," he said.
Round Lake District 116 Assistant Superintendent of Business Bill Johnston said he sympathizes with the state's dilemma, but if roughly $320,000 will have to come out of next year's budget, it will be challenging.
"It's too early to tell what that impact might be," he said. "Over the years, school districts have been impacted by things that have happened at the state level by state aid being reduced. You'd hope they'd look at other areas to balance the budget than to do things that negatively impact school districts."
• Daily Herald staff writers Larissa Chinwah, Justin Kmitch, Eric Peterson and Jamie Sotonoff contributed to this report.