Pension cuts could save local schools from cost shift, lawmakers say
SPRINGFIELD — Two suburban lawmakers say legislation approved by the Illinois House would cut teachers' retirement benefits so drastically that a plan to have local schools pay for pensions might not cost the districts anything.
State Reps. Elaine Nekritz of Northbrook and Darlene Senger of Naperville shared the new numbers with reporters today as the Friday deadline to come up with a solution to the state's rising pension costs this year quickly approaches. The estimates were generated by Illinois public pension fund officials.
But pensions continue to keep lawmakers at loggerheads, with unions and Senate Democrats backing a different proposal.
The state pays most of the employer's share for suburban and downstate teachers' pensions, and a plan to hand those costs over to local districts has been controversial for more than a year. Local school districts protest that the move could cost them — and potentially property taxpayers — millions of dollars a year.
But a plan backed by Nekritz and Senger has been approved by the Illinois House that would cut teachers' benefits and require them to pay more toward their own retirements. Those increased payments from teachers would cover their reduced benefits, leaving the schools to pay nothing more, the two lawmakers say.
“There would be no shift,” Nekritz said.
Union leaders shot back, saying the House benefit cuts would create no savings because they would be struck down as unconstitutional.
Senate Democrats and union leaders stand by a union-backed plan they approved and are working hard against the House plan.
“The savings are a fiction,” reads a statement from the We Are One Illinois union coalition.
“The state's futile waste of time and resources will cost Illinois far more,” the statement says.
The so-called cost-shift has been an integral part of talks about how to tackle the state's $100 billion pension debt.
The idea that its impact on schools might be small could help push both the cost-shift and the House's benefit cuts onto the governor's desk by the end of the week.
Republican concerns about a cost shift might continue. Even if there's no upfront cost because of benefits cuts, local school districts would be responsible for future debt in teachers' retirement funds.
The market going sour or math mistakes in estimating pension costs could create debt for the local school districts in the same way those factors have contributed to the state's pension problem.
Details of how a shift would work for schools remains unclear, but focus might turn to the debt question if the Senger and Nekritz analysis is true.
“That'll determine what the shift really means,” Senger said.