Last week, powerful Illinois House Speaker Michael Madigan appeared to all but endorse an idea to force downstate and suburban school districts to pay a significant share of their state pension contributions.
Senate President John Cullerton (D-Chicago) floated the same proposal last year, and Gov. Pat Quinn added his support not long ago.
Needless to say, if all three Democratic leaders are talking about it, you can probably expect some action this year. However, there will be strong pushback from suburban and downstate legislators who undoubtedly will fear a voter backlash over potentially massive local property tax increases to pay for the idea.
Madigan (D-Chicago) spoke for well over an hour last week at an Elmhurst College event at the invitation of his old nemesis Lee Daniels, who served as speaker for two years after the 1994 Republican landslide. Madigan almost never talks for that long in public, so his speech was heavily covered by the media.
As is his custom, Madigan didn’t officially endorse the plan to ease the state’s ongoing budget strain by passing pension obligations down the governmental food chain to school districts and public colleges and universities, but he did indicate that he was strongly leaning in that direction.
The “normal arrangement,” for pensions, Madigan said, was that the employee and the employer both pay into the pension system. But school districts pay just 0.054 percent of payroll into the Teachers’ Retirement System, Madigan noted (and when he has it down to the decimal like that, you know he’s focused on the issue). He also said the universities pay “zero” toward employee pension costs.
“And let’s understand,” Madigan said about public school employees, “these are people who never got a payroll check from the state of Illinois.”
The speaker went on to note that the state paid $4 billion this year into its five pension funds, half of which went to the Teachers’ Retirement System (TRS).
“So over one half of our obligation to pensions, which is the subject of great public debate today, is for people (teachers) who never worked for the state of Illinois,” Madigan said.
Madigan also correctly pointed out that the Chicago Public Schools has its own pension fund and pays its employer share.
“You’re never going to read this in a newspaper article. … They’re never going to put a paragraph in there talking about that,” Madigan said, echoing others who’ve wondered for years why Chicago taxpayers fund the schools’ pension fund while they and the rest of Illinois taxpayers pick up the tab for suburban and downstate school districts.
“Even I don’t remember why that happened,” Madigan said jokingly. “I’ve never found anybody who can tell me why the state of Illinois stepped up one day and said, ‘OK, school districts, we’ll just pick up all your pension costs.’”
He also pointed out that school districts pay the employer share for pensions for support staff, such as janitors and cafeteria workers, but not for teachers.
This is truly an odd arrangement. All state taxpayers finance TRS, but the Chicago Public Schools receives just a relatively small amount of state cash for its pension fund. It doesn’t seem fair, but often life ain’t fair.
The teachers unions haven’t taken a position yet on this issue, probably knowing that freeing state money could mean more cash for education and that school districts couldn’t short the pension fund because state law forbids it.
The state is the only government entity in Illinois that can legally shortchange pension funds and has done so for years, which is what got us into this long-term pension crisis to begin with.
It’s doubtful that anything close to the state’s annual $2 billion contribution to TRS will be passed down to school districts right away, but property owners may be about to get hit with a bigger bill nonetheless. Get ready to pay. Again.