* From the Illinois Policy Institute…
Pension costs for state government workers reached an all-time high in 2016, consuming 25 percent of the state’s general budget. Today, more than $8 billion of the state’s yearly $32 billion budget goes to pay for pension costs, sapping tremendous amounts of money from social services for the developmentally disabled, grants for low-income college students, and aid to home health care workers.
A large portion of those costs are driven by major factors that push up pension benefits: early retirements, generous cost-of-living adjustments, and limited employee contributions. But there are other pension perks that contribute to the unsustainable growth in pensions. Government workers’ ability to roll over and accumulate unpaid sick leave is one of those perks. Teachers and other members of the Teachers’ Retirement System, or TRS, are one group of workers in Illinois who benefit from unpaid sick-leave accumulation. Under current pension rules, teachers can accumulate up to two years of unpaid sick leave. Upon retirement, that sick leave is applied to teachers’ years of service, which in turn boosts their pension benefits.
In total, over 73,000 retired teachers and other school workers are taking advantage of this perk, which will cost taxpayers nearly $3.4 billion over the next three decades.
The sick-leave perk can boost retirees’ pension benefits significantly. Over 6,800 TRS retirees will receive over $100,000 in additional pension benefits, and the top 10 beneficiaries of the sick-leave perk will see their lifetime pension benefits boosted by $350,000 or more.
While sick leave is necessary for working teachers, letting unpaid sick leave accumulate for the purpose of boosting pensions is an expensive perk that taxpayers cannot afford.
* Jake Griffin at the Daily Herald took a closer look…
To see how it works, take a look at benefits for a 60-year-old educator with 32 years of experience and a $98,000 final average salary.
Without the sick leave boost, the retiree would receive $68,992 as a starting pension, or 70.4 percent of the final average salary, the institute calculated.
With two years of sick leave credit, the starting pension would be $73,304, or 74.8 percent of the final average salary.
However, if the sick leave perk was eliminated, the educator would likely continue to work two more years to maximize retirement benefits, teacher union officials believe.
Using the same 2 percent annual raise assumed in the report, that educator would now retire at 62 with a final average salary of $102,000 and a starting pension of $76,296. Because the salary is higher, the taxpayer-funded employer contribution also is higher. […]
“If you get them to retire two years earlier, you can replace them with lower-costing new hires,” said Larry Frank, director of research at the Illinois Education Association, one of the state’s main teacher unions. “And if they can accrue the sick leave, (taxpayers) don’t have to pay two years’ worth of substitutes.”