* The truly big state money is spent on employer pension costs at the Teachers Retirement System. Higher education pension costs are a relative drop in the bucket…
Illinois’ public colleges and universities will gradually begin picking up the costs of their employees’ pensions starting next year under an agreed plan announced Thursday by House Speaker Michael Madigan and higher-education representatives.
“It’s only the right thing to do,” Madigan (D-Chicago) told reporters after the open meeting. “Whenever one person spends money and another person pays the bill it’s a bad policy, especially for government.”
Madigan’s long-sought pension ‘cost-shift’ bargain - an idea not contained in either of the two major pension reform bills floating in the Legislature - comes in the second week of his formal discussions with higher education institutions.
Under the plan, the state’s public universities and community colleges would pay an additional one-half percent of payroll costs into the pension system each year starting in fiscal year 2015 until the colleges cover all costs. Madigan indicated similar changes to elementary and secondary school districts were coming but did not discuss details.
Universities and colleges privately signed on to this concept months ago. So this isn’t completely “new.”
* A very important point…
The proposal also allows community colleges and universities to opt out of future pension enhancements that might be approved by the General Assembly, since they would be responsible for picking up any additional costs associated with it.
* While this initial agreement won’t save a ton of money for the state, it will cost the colleges and universities a noticeable sum…
Republicans opposed to the change contend the move could drive up property taxes as community colleges seek to offset the extra burden. Representatives for the state’s universities and community colleges acknowledged they will have to reduce positions, cut programs, and raise tuition and fees to make ends meet.
Tuition across the state already has been on the rise in recent years. The base annual tuition for new students at the University of Illinois’ flagship Urbana-Champaign campus starts at $11,834 — a 112 percent increase from 10 years ago. With fees and housing costs, the yearly price tag grows to at least $24,729.
The pension shift will cost the U. of I. an estimated $5 million to $6 million each year, President Robert Easter said. Southern Illinois University would need to set aside a projected $3 million to $3.5 million each year, President Glenn Poshard said.
But the two leaders contended that they would rather be forced to make tough spending decisions than face additional cuts to general state spending. Those cutbacks have been the norm in recent years as the state struggles to get its finances in order.
* And with higher ed in the bag, the next target is TRS…
Rep. Elaine Nekritz, D-Northbrook, said the plan for universities and community colleges will be discussed with public school districts.
“We want to have a discussion with the local districts and those representing the local districts here to see whether this program works for them, doesn’t work for them,” Nekritz said.