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INSTEAD OF
TAX HIKES, ELIMINATE THE SICK-DAY PERK DRIVING UP PENSION COSTS
Illinois Policy Institute
Illinois state senators are considering a
budget with massive tax hikes, but is short on critical pension reforms,
which would save taxpayers billions.
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 Teachers in Illinois can roll two years worth of sick days into their total
tenure of service to the state. This additional two years of service tacked in
to end of their career allows them to retire with an even bigger pension.
More than 73,000 teachers have taken advantage of this sick-leave perk as of
2015.
That will cost taxpayers $3.39 billion over the next 30 years.
Perks like this drive up spending and are a burden to taxpayers – and they’re
ripe for reform. But instead of tackling spending reform, Illinois state
senators are considering a budget proposal with multibillion-dollar tax hikes.
This plan is short on needed reforms to two of the biggest cost drivers in state
government: school districts and public sector pensions.
Even though Illinois’ public sector employees already enjoy overgenerous
salaries and benefits, this imprudent perk that allows school teachers to
inflate their pensions with accumulated sick-leave days remains.
Reforming sick-day rollover is a $3.4 billion no brainer
The average age of retirement in the Teachers Retirement System pension fund is
59-years old, and the average total pension payout is an astounding $2.2
million. Utilizing the full two years of the sick-leave perk can mean the
retiree will receive $165,000 more on average in pension benefits.
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The state enables this problem by significantly subsidizing
Illinois’ plethora of school districts, shielding those districts
from the costs of their profligate spending decisions like doling
out high salaries, extravagant benefits and excessive perks.
The 859 local school districts eat up a significant portion of
state revenue. Almost two-thirds of state property tax revenue goes
to school districts, and they also account for more than half of the
cost of subsidies paid out to local units of government.
What’s more, the state of Illinois pays the employer contribution to
teacher pensions with Illinois taxpayer dollars. By agreeing to
cover these costs for local school districts, the state of Illinois
is using taxpayers to shield local school districts from the full
consequences of their contractual agreements with teachers.
Because school districts are leaning on others for the full cost of
teachers’ retirements, they are more likely to offer perks like
utilizing accumulated sick leave time to enhance pensions.
Illinois state government should stop incentivizing a lack of
accountability from local school districts. Instead of increasing
taxes even more on already overtaxed Illinoisans, legislators should
make structural reforms to our state’s pension systems to end the
state’s $130 billion unfunded pension liability heaped on working
Illinoisans and end irresponsible perks like the sick leave pension
benefit.
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