With the Illinois Teachers’ Retirement System short a staggering $75 billion of what it needs to pay promised pensions, you might think state lawmakers would go slow on sweetening benefits any further. But that’s exactly what Springfield Democrats, with some help from Republicans, just did.
Buried in the fiscal 2020 budget package that Gov. J.B. Pritzker signed into law is a little-noticed provision that repeals a 2019 law intended to curb end-of-career salary spikes that some school districts tend to award retiring employees as a goodbye gift of sorts—a gift that taxpayers statewide have to pay for via pensions paid by TRS.
The original provision, enacted under ex-Gov. Bruce Rauner’s administration, was bitterly opposed by teachers unions, and they’re bragging big time about what they’ve now done.
“This is a huge win for members,” the Illinois Federation of Teachers declares on its website. “The law depressed salaries for members. . . .Employers use the threat of higher pension costs as an excuse to keep wages low for all employees.”
“Educators from around the state stepped up to save our profession and protect our students,” Illinois Education Association President Kathi Griffin said in a press release. “It’s amazing to see how powerful we can be when we are united.”
According to a statement from Pritzker’s office, the provision will cost TRS $20 million in the first year alone. That figure will rise quickly to roughly $60 million a year as the new law is fully implemented over several years.
“The state cannot afford to be picking up the cost of increased teachers’ pension benefits when it is already struggling to adequately fund its pensions,” Civic Federation President Laurence Msall told me. Local school districts still are free to offer big raises if they want, he said, but rather than passing on the pension costs to taxpayers statewide, the districts ought to pay it themselves if the raise is that important to them.
Under Rauner’s 2019 law, raises in the last years of a teacher’s career were capped at a maximum of 3 percent a year. (Pensions in TRS, which covers all public school teachers outside of Chicago, are based on the highest four consecutive years in a teacher’s last 10 years on the job.) Any incremental pension hike would have to be paid by local taxpayers in the teacher’s district, not TRS.
Under the new law, the cap is raised back to the prior level of 6 percent. That means a person’s eventual pension can be raised more than 24 percent if they get the 6 percent each of their last four years of work and the raises compound.
Pritzker, in his statement, said the Rauner provision was unfair, effectively “creating artificial ceilings for valued teachers (that) not only hurts our ability to deal with the state’s teacher shortage, but also holds back teachers who take on additional roles such as coaching or teaching an additional class.”
Beyond that, unions charged that since many teachers have relatively short careers, the provision would affect much of their membership and not just those nearing retirement.
House Majority Leader Greg Harris, D-Chicago, said the amount of money involved “is not huge” and that the 3 percent provision made it more difficult to get teachers to work overtime as coaches and in other extracurricular activities.
“This provision was added at the request of members of all four caucuses,” Harris said, referring to House and Senate Democrats and Republicans. Pritzker is looking at other ways to manage the state’s pension costs, he added.
A spokeswoman for House GOP Leader Jim Durkin confirmed that his caucus did not object when the repeal provision was added to the must-pass budget implementation bill.
“We had to make a decision on the bill as a whole, parts we like and those we didn’t,” she said in an email. “Our caucus didn’t specifically agree to that provision.”
A spokesman for TRS said they were just in the process of implementing the 3 percent cap, and now will have to junk that work.
Because the provision can apply to as many as the last 10 years of employment, it’s impossible to project now how much the new clause ultimately will cost, he said.
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via Crain’s Chicago Business
June 10, 2019 at 01:51PM