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 The Illinois pension crisis is the worst in the nation. Illinois teachers unions
routinely opine on pensions, but rarely tell their members the whole story.
For example, Illinois Education Association’s leading resource for teachers is
an outdated pension explainer that was released in 2012. It dealt mainly with
pension proposals drafted nearly a decade ago and before bipartisan legislation
passed the General Assembly, which was subsequently struck down by the Illinois
Supreme Court.
What’s missing from IEA’s information on pensions?
Any mention that the Teachers’ Retirement System could run out of money. Or any
mention that it is the public pension crisis driving Illinois’ exorbitant
property taxes, which are the second highest in the nation.
In other words, there may be no money left for younger teachers when they
retire. And in the meantime, the broken system is making it more expensive for
them to live here.
“Now we have huge shortages of teachers because salaries are low in Illinois for
educators, and due to the pension crisis, the state can’t even promise they will
have money to support teachers who are already retired. It’s decimating the
education field,” retired special education teacher Deb Roti said.
Illinois teachers unions need to be honest with their members and support
commonsense reforms that are best for all Illinoisians.
In the meantime, teachers need to contact their lawmakers and urge them to
support a pension amendment in 2022 that will better protect their pensions.
The Teachers’ Retirement System could run out of money
The Teachers’ Retirement System is only 38.6% funded.
But what does that mean?
Financial experts generally recognize a pension funding ratio of 60% or less as
deeply troubled and 40% or less as a point of no return. That means it may never
recover without significant structural changes.
In other words, TRS is at the point where the fund will eventually run out of
money and be unable to pay promised benefits to retirees, absent reforms.
Of course, unions have a history of advocating for higher taxes to address the
pension crisis. But more than 25% of state revenue already goes to pensions and
retiree health care. That would have to double to fund promised benefits at
current levels.
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Not to mention teachers would also get hit by any
tax increases allegedly aimed at saving their pensions.
Currently, some teachers hired on or after Jan. 1, 2011, are
subsidizing the pensions of teachers hired before that date. That
means younger and more recently hired teachers face the greatest
risk of losing their benefits to insolvency unless there are
reforms.
The public pension crisis is driving property
taxes, making it more costly for teachers to live in Illinois
Illinois is home to the second-highest property taxes in the country
and double the national average. The median property tax rate
statewide is 2.27%, with residential property taxes having increased
83% since 1996.
The main driver of property tax increases: public pensions.
In recent years, Illinois cities have been forced to either lay off
current workers and thereby worsen services to residents, raise
taxes or both to keep up with the cost of these pension systems.
And the combination of higher taxes and worsening services is likely
a major reason Illinoisans have fled to other states.
In other words, it’s just too expensive to live here.
And that goes for educators who live and teach here, too.
Teachers unions should get behind pension reform
It won’t matter that there is a constitutional provision protecting
public pensions if there is no money left to fund them.
Any realistic plan to fix state finances must start with a
constitutional amendment to allow for reforms that make the pension
system more sustainable and affordable for taxpayers. The Illinois
Policy Institute’s “hold harmless” pension reform plan would do just
that while also 1) preserving public retirees’ earned benefits and
2) protecting them from the prospect of insolvent retirement funds.
Teachers – particularly those hired on or after Jan. 1, 2011 –
should contact their unions, telling them to be honest with their
members.
They should also contact their lawmakers, urging them to support a
pension amendment in 2022 that will better protect their pensions.
Illinois’ educators deserve to know their pensions are in danger –
not from potential reforms, but from not doing something before it
is too late. |
