Rauner's plan would increase pension penalties for schools
A law aimed at curbing late-career pay raises for educators continues to sting some suburban school districts with six-figure costs.
And now a new proposal from Gov. Bruce Rauner raises the prospect of more penalty costs to school districts if pay for teachers or administrators nearing retirement rises above the rate of inflation.
Under a law approved last decade, school districts have to pay the additional pension costs that result from giving teachers or administrators end-of-career pay raises of more than 6 percent a year. The law is aimed at preventing big pay bumps that drive up pension costs for the state. Pension benefits are based in part on employees' salaries in the final years of their careers.
An annual Daily Herald review of the numbers shows that in the 2013-2014 school year, two suburban districts paid more than $100,000 in penalties to the Teachers' Retirement System.
Algonquin-based Community Unit District 300 paid $194,171, up from around $104,000 and $110,000 in the previous two years, TRS records show.
East Aurora District 131 paid $177,121, up from about $88,000 and $105,000 in the two previous years, the same records show.
A spokesman for District 300 declined to comment, and calls to District 131 weren't returned.
Meanwhile, the suburbs' biggest school district got its penalty costs down.
Elgin Area District U-46 was charged well over $100,000 each year for the past few years, but in 2013-2014, the district paid $58,482.
And Schaumburg Township Elementary District 54, which had paid more than a half-million dollars in some previous years, paid only $17,803 for the last school year and $24,960 the year before.
Some districts now write into their contracts with teachers that late-career pay raises must be capped at 6 percent to avoid penalties, but schools can get caught up by situations such as unexpected retirements or teachers getting coaching stipends that push a pay raise higher than 6 percent.
Rauner, a Winnetka Republican, proposes abandoning the 6 percent threshold. Instead, the governor wants school districts to pay for pension costs generated by teacher pay raises that are higher than the Consumer Price Index, a measure of inflation.
For 2014, the index was at about 1.5 percent, and it's hovered around there in recent years, peaking at 3.2 percent in 2011, according to the federal Bureau of Labor Statistics.
Rauner's proposal "calls for the local school districts to pay pension-related costs if the increase in salary -- used for calculating a pension benefit -- is greater than the previous year's CPI," Rauner spokeswoman Catherine Kelly said in a statement. "The savings help reduce the state's cost for pension spiking."
Kelly said the plan, if approved by lawmakers, would take effect July 1.
St. Charles District 303 Superintendent Don Schlomann said he agrees with Rauner's plan to keep pension costs in check in principle. But making it work could be tough, he said.
For one, teacher contracts span multiple years and the Consumer Price Index can vary over that time, making it tough for a district to prepare. Plus, he said, the district can't avoid every penalty because of unexpected factors. The district paid $96,051 in penalties three years ago, just $861 the next year and about $27,000 last year.
"The difficult thing is in the logistics of this," Schlomann said.
Schools might not need to figure it out soon.
Some Democrats last week raised sharp objections to Rauner's pension plans, saying they needed more information before they could go along.
Rauner's "pension spiking" idea is part of a bigger package of retirement proposals that would be challenged in court. But the smaller provisions could be approved on their own.
Still, Democrats control the General Assembly, and their hesitation last week puts the future of Rauner's plans in question.
"The road to pension hell is paved with rash actions," said state Sen. Daniel Biss, an Evanston Democrat.
Rauner's pension plans are part of a budget proposal being weighed by lawmakers in Springfield. The typical deadline to approve a spending plan is May 31.
Pension penaltiesLocal school districts that paid more than $20,000 in penalties to the state last year for giving raises in excess of 6 percent to teachers or administrators.
Community Unit District 300: $194,171.20
East Aurora School District 131: $177,121.06
West Chicago District 33: $62,909.82
Elgin Area School District U-46: $58,482.55
Wheeling Township District 21: $40,164.60
Lombard District 44: $31,793.12
Villa Park-Lombard District 45:$29,182.45
West Aurora Unit District 129: $28,495.61
Northwest Suburban District 214: $28,238.74
St. Charles Unit District 303: $26,989.80
Source: Teachers' Retirement System