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 Illinois school districts paid $8.8 million in penalties during two
recent school years after spiking teachers’ final years of pay that then turn
into boosted retirement incomes.
But the penalties only cover a fraction of the total cost from schools sending
their retirees off with these parting gifts.
The penalties were paid to the Teachers’ Retirement System because the school
districts exceeded 6% annual boosts in salaries and sick-day payments for
educators who retired during the 2018-2019 and 2019-2020 school years.
A 2005 law sets that 6% limit per year. Any increase beyond that must be paid by
the district. The law aims to prevent pension spiking, which occurs when
employee compensation is inflated just before retirement to receive a higher
pension than would otherwise be earned.
While the districts were penalized, the $8.8 million will fall far short of
covering the costs to taxpayers from the inflated retirements. Districts pay a
fraction of what they owe on paper, said Dave Urbanek, communications director
for TRS.
“In the first 10 years of the program, 2005 to 2015, the excess salary
contributions levied against school districts totaled $149.5 million, or an
average of $14.95 million per year,” Urbanek said. “However, because of
exemptions to the 6% threshold built into the law at that time, districts paid
only $39 million during that decade, or an average of $3.9 million per year.”
That was a $110.5-million shortfall just during that decade into a retirement
fund that now has only 46% of the funds it will eventually need to pay retired
teachers. The TRS pension debt stands at $74.7 billion.
Since 2008, spending on educator pensions has grown by 458%, while general
education spending is only up 17% in that time, adjusted for inflation.
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Bipartisan legislation passed in 2018 lowering the
cap from 6% to 3%. The 3% was never implemented but was projected to
save taxpayers $21 million across all pension funds. The General
Assembly brought back the 6% cap in the 2019 budget.
The Illinois Education Association, the largest
teachers union in the state, led the charge to repeal the 3% cap.
The group claimed it would’ve hindered the ability to attract and
retain educators in Illinois.
The 6% cap doesn’t seem to matter, because it’s three years after
the repeal and Illinois is grappling with a statewide teacher
shortage. The shortage is impacting 88% of school districts,
according to a 2021 survey.
Survey research shows that fewer than half of young teachers are
able to correctly identify their pension benefits and only 2% know
how much they contribute. This lack of knowledge about pension
benefits casts serious doubt on the narrative that pensions are an
important recruitment tool.
Plus, Illinois spends nearly 40% of its education dollars on
pensions.
Illinois’ strong teachers unions rolled back a bipartisan fix to
pension spiking, plus saw their demands met for excessive retirement
benefits that now take dollars out of classroom instriction.
But the union bosses aren’t satisfied: now they want Amendment 1, an
attempt to get union and strike powers written into the Illinois
Constitution. If they succeed in convincing voters Nov. 8 to pass
the amendment, Illinois will be the only state that grants
government unions power to bargain, and potentially strike, over a
nearly endless array of topics.
That increased power would not just be seen in pension spiking
penalties, but in residential property tax bills.
Dylan Sharkey recently graduated from the University
of Iowa with a bachelor’s degree in political science. He’s a
life-long resident of St. Charles, Illinois, and is currently
pursuing his master’s degree in public policy from Northwestern
University. |
