Tuesday, Aug 19, 2014
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Speaker Madigan begins push to shift pension costs to local schools

1 year, 3 months ago by Ben Yount

Madigan calls downstate teacher pensions a "free lunch"

SPRINGFIELD — Who should pay the cost of retirement for public school teachers, the state or the district?

On Thursday, House Speaker Mike Madigan, D-Chicago, will host a meeting for Thursday at the Illinois Capitol here to begin discussions on shifting the costs of public pensions to local districts.

“It’s clear the free lunch enjoyed by suburban and downstate elementary and secondary school districts and state community colleges and universities has exacerbated the state’s pension crisis and is not sustainable,” Madigan said in a statement Tuesday. “The practice of state taxpayers paying the pensions of non-state workers should come to an end as soon as possible.”

The state of Illinois pays close to 90 percent of the tab for local teachers’ pensions. In the previous budget that came to $2.7 billion. The Teachers’ Retirement System is the largest of Illinois’ five pensions systems and has the largest unfunded gap, nearly $50 billion.

But moving the burden to local districts could be crushing, one state advocacy group says. But there could be a solution, they say.

Jessica Handy, policy director for the education advocacy group Stand for Children, said if the state would pay for everything that it owes for public education, then it would be not be a problem for some schools to pay for their teachers’ pensions.

“We have incredible disparities within our school systems, and general state aid is the one funding mechanism that is fighting that,” Handy said.

Illinois’ general state aid is a per-pupil formula that is supposed to guarantee some state help for all schools. The plan also works to ensure that schools with smaller tax bases are not left behind.

Illinois’ fiscal crisis, perpetuated by the sky-rocketing costs of public pensions, has forced the state to slash education funding. Schools receive about 80 percent of the general state aid promised by lawmakers.

But education cuts go deeper than just per-pupil money. Illinois has taken a hatchet to funding for school buses, special education and many special project grants.

Gov. Pat Quinn’s proposed budget would cut another $400 million from public schools next year.

Illinois’ pension payment will increase $1 billion next year, to a total annual payment of nearly $8 billion.

Handy said Illinois cannot shift the cost of pensions and walk away. She said the state must reinvest money that would have gone to pensions back into the classroom.

Handy’s group is pushing a map that she says shows 26 of Illinois’ 102 counties would lose under a cost shift. But that means the majority of Illinois counties could see their schools helped if the state paid for classroom education and not teacher retirement.

“The districts with high property wealth and low poverty counts would prefer to have money (go to pensions),” Handy said. “The districts with high poverty counts and low levels of property wealth would be better if they took that money in general state aid.”

Chicago, where local taxpayers pick-up the costs for teacher retirement, and a huge swaths of southern, eastern and western Illinois, would benefit from a cost shift according to Stand for Children’s map. The Chicago suburbs and many mid-sized downstate counties look like losers on the map.

Senate Republican Leader Christine Radogno, from suburban Lemont, is quick to say that pension costs and even general state aid are just part of the education funding picture in Illinois.

“The argument is also made that downstate and suburban communities are getting a free lunch when the state makes its pension payments, while Chicago pays its own,” Radogno added. “However, with data provided by the State Board of Education, we came to the unavoidable conclusion that it is Chicago Public Schools that receive a disproportionate share of state school funding.”

Chicago receives millions of dollars in poverty grants and that other schools do not.

Radogno said a cost shift “would add insult to injury to downstate and suburban school districts and their property taxpayers.”

Many school groups in Illinois have fought the notion of a cost shift, but none returned calls for comment.


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