School Officials Speak Out Against Proposed Shift in Pension Payments

Lemont school officials are speaking out against a proposal by Illinois legislators and Gov. Pat Quinn to shift the employer costs of teacher pensions from the state to local school districts.

The plan is expected to be part of a list of recommendations by the state pension committee this week to address Illinois' $83 billion unfunded pension liability—$44 billion of which is from the Teachers’ Retirement System (TRS).

TRS pension covers certified employees including teachers, administrators, social workers and counselors. Currently, a TRS employee pays 9.4 percent of his or her salary into the pension system. 

By comparison, typical U.S. workers pay 6.2 percent of their pay into Social Security. TRS employees pay 1.45 percent into Medicare, as other U.S. workers do. The local school district then pays another portion of the pension contribution and the state pays its share. 

State legislators are proposing that the portion that would typically be paid by the state become the responsibility of local school districts and in turn, that of local taxpayers.

The move would save the state a reported $1.3 billion per year—but mean millions of dollars in costs for already cash-strapped districts, according to reports.

Officials in and have publicly expressed their opposition to the plan in recent weeks, claiming the shift would have devastating effects on the quality of education in Lemont.

Plan would cost District 210 approximately $730,000 each year, officials say

District 210 sent out a press release Monday detailing the proposed pension shift, and the “catastrophic effects” it would have on the high school’s annual budget and quality of education provided to students.

According to the release, taking on the responsibility of teacher pension payments would cost District 210 an estimated $730,000 annually. The cost is equivalent to the salaries and benefits of 11 teachers—or more than 10 percent of the school’s faculty—and represents more than 60 percent of the school’s annual budget for extracurricular activities and athletics, officials said.

"Lemont High School is in much better financial condition than most school districts, and this will have dramatic effects on our efforts to educate our students,” District 210 Superintendent Sandy Doebert said. “I can't imagine what districts that are not financially healthy will have to do. I also can't imagine what the state will do when school districts across the state cannot meet their financial responsibilities as a result of this unfunded mandate."

Doebert said she has been in contact with Sen. Christine Radogno (R-Lemont) and is in the process of reaching out to State Rep. Jim Durkin (R-Western Springs) regarding the district’s opposition to the plan. Lemont High School faculty members have also been encouraged to communicate with their own legislators, she said. 

District 210 in September 2011. However, the district has been in a position to cover the deficit using its reserve funds, which officials attributed to the school board's "longstanding practice of careful spending."

Last fall, District 210 administrators and school board members developed a plan that would allow for a balanced budget by the 2015-16 school year. The plan translates to approximately $1.2 million in cuts over the next three budget cycles. 

According to Doebert, the additional burden of pension payments would dismantle the work done by the administration and school board, and would likely require more drastic cuts.

"Having this additional unfunded mandate will completely undermine the steps we have taken to balance the district's budget,” she said. “It will result in reductions in personnel, programs and services, and impact our efforts to support student achievement ... Cuts would definitely have to be made in curricular and extra-curricular programs as well as in a number of faculty and staff."

Interim Superintendent: Pension shift would be “detrimental” to District 113A financial stability

Since being certified in financial difficulty by the state in December 2009, District 113A has cut approximately $4 million from its budget through reductions in staff, transportation services and programs, as well as the closing of Central School. 

Although the district is projected to be off the state’s financial watch list by June 30, 2013, the proposed pension plan “would completely negate” the progress made over the past three years, according to Interim Superintendent Robert Madonia.

“If this plan were to pass, it would be detrimental not only for schools in Lemont, but for almost all schools across the state,” he said. “District 113A and many other school districts have already made dramatic cuts. We simply cannot afford this; it would destroy public education.”

During their March 20 business meeting, District 113A board members adopted a resolution to formally oppose the proposed changes to TRS funding in Illinois. Madonia said the resolution was adopted by multiple school districts, and sent to state legislators. 

“We needed to take a proactive approach and let the state know that we cannot afford to take on their pension liability,” Madonia said.

What's next

With the May 31 budget deadline looming in Springfield, District 210 and District 113A—along with school districts across the state—are doing their best to raise awareness about Quinn's proposal.

"Essentially, Illinois lawmakers are preparing to make up for a 40-year failure of meeting legally required financial obligations, which they themselves established, by shifting that responsibility to local school districts, but will keep those districts' hands tied by requiring that they pay the bill without any new revenue source to pay for it," District 210 officials said in a statement.

If legislators were to adopt the plan, school districts would begin seeing the effects immediately. Without any new sources for revenue, the burden would likely fall on the taxpayers to maintain the level of education in Lemont, officials said. 

"It is important to remember that Cook County is a tax-capped county," Doebert said. "Some school districts in other counties that are not capped may have the opportunity to increase their levy in order to seek new revenue to offset this new required expenditure. We would not be able to do that."

The majority of the revenue for both districts—roughly 80 percent—comes from local property taxes. Under the Property Tax Exemption Limitation Law—more commonly known as the tax cap—districts can only increase their tax rate by the lesser figure of five percent or the rate of inflation, as determined by the index.

"Without a referendum, our hands essentially are tied if we were to seek new revenue," Doebert said. "In the meantime, students will suffer the consequences of the legislators' actions. Students will be the ones who have fewer classes from which they can choose and fewer extra-curricular opportunities to sharpen their skills and explore their talents."