The big lie on teacher pensions
Thursday, May 3, 2012 - Posted by Rich Miller
* This is not true…
Teachers are supposed to pay almost 9.5 percent of paychecks into their own retirement accounts. But two-thirds of all public school teachers in the state don’t contribute anywhere near, and many contribute nothing at all, according to a report set for release Thursday by the Illinois Policy Institute, a government watchdog.
* The Teachers Retirement System addressed this canard last year…
When a school district “picks up” the contribution, the money still comes from the teacher’s total compensation package. The “pick up” is in reality only a difference of when the district deducts the contribution from the teacher’s salary – either before taxes are deducted or after taxes are deducted. Teacher unions for years have negotiated this point with school boards as part of overall salary and benefit packages for teachers. There is an income tax savings for teachers if the contribution is deducted pretax.
In practical terms, no teacher writes TRS a check every month and mails it, so no teacher in Illinois directly “pays” TRS. All contributions from every teacher in every school district are deducted from paychecks by the school districts and sent to TRS in one lump sum. Member contributions to TRS in fiscal year 2011 totaled $909.6 million.
The IPI conclusion that taxpayers are paying “extra” for the pick-up rings false because, in the end, taxpayers pay for everything in a school district, including all teacher salaries. There is no “extra” $400 million.
If you carry the IPI’s conclusion about TRS contributions to other examples you’ll realize that everyone who participates in Social Security hasn’t paid their share of federal Social Security taxes because their employer is paying the tax for them. No one writes a check to Social Security when they get paid. The FICA tax is deducted from the paycheck. It’s the same thing for TRS contributions. One of the reasons Illinois teachers don’t contribute to Social Security or get a Social Security benefit is because they make the same type of paycheck contribution to TRS.
Teachers negotiate that pension pickup in their contracts, almost always in exchange for wage concessions. Things usually even out, but lower wages mean lower costs to the pension system in the long run. The Policy Institute claim is just plain silly.
* In other news, TRS’ executive director tried to fire up the base this week…
While many questions remain about the future of Illinois teacher pensions, hundreds of people attending a forum Wednesday were told to get politically active if they want to keep what they have.
“Contact them (Gov. Pat Quinn and state lawmakers), call, email, write a letter. Get on a bus and go to Springfield. Be engaged with legislators all along. Describe your personal stories,” Teachers Retirement System Executive Director Dick Ingram told about 400 teachers, retirees and members of the public at a town hall-style meeting at Normal Community High school.
* And a Senate committee killed off a pension reform bill…
An Illinois Senate committee on Wednesday rejected a measure that would force local government to pick up the tab when it gives an ex-lawmaker a big paycheck to fatten his pension.
The bill passed the House on a 110-0 vote in March. The legislation sought to require cities, villages or other governments employing a former lawmaker for short periods of time to pay for the additional pension expenses that go with the new job, said House Republican leader Tom Cross of Oswego, who sponsored the bill in his chamber.