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* UPDATED x1 * The cost shift appears to be working already

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* I’m not trying to single out Sen. Rezin here, but we have a recent quote so let’s use it. This has been the standard response to the Democratic push to shift employer pension costs away from the state and down to local school districts…

“It is not helping to stabilize pensions. It is purely shifting a cost that is in the state budget down to local budgets,” said state Sen. Sue Rezin (R-Morris).

* But the second largest school district in the state, northwest suburban District U-46, concluded some very interesting teacher contract negotiations a couple of months ago…

The district still may terminate the agreement without notice if the state’s property tax extension law is passed or changes are made to the teacher pension law that would shift the burden of teacher pension payments to the school board. [Emphasis added.]

In other words, if the cost shift passes, teacher pay raises can be nullified without notice. Why would the district want to do that? To keep their own pension costs down. If they finally have skin in the game and can no longer make state taxpayers pay the costs, then they’ll likely nullify the pay raises.

So, for at least one district, the cost shift idea is already having an impact.

* Also, Gov. Pat Quinn has signed on to a long, extended shift process…

On Monday, Quinn advocated giving school districts 12 years to phase in their shares of pension costs.

Twelve years is, of course, a very long time for districts to absorb those costs.

* But there doesn’t seem to be any hurry by anyone on either side of the aisle to get this done right away…

“If it affects next fiscal year, then we should work on it and refine it and pass it in the next legislative session,” [Rep. Pam Roth (R-Morris)] said.

*** UPDATE *** I missed this one earlier. Speaking of delays…

Illinois Senate President John Cullerton renewed his call Wednesday for the House to take up pension changes affecting only state employees and state lawmakers.

The Chicago Democrat said acting on even a portion of the state’s pension funding dilemma should send a message to bond rating agencies that the state is addressing its financial problems, including underfunding of its pension plans.

“The rating agencies should look to the vote that we took in the Senate and hopefully the vote that they’ll take in the House and see we passed major, major pension reform,” Cullerton said.

posted by Rich Miller
Thursday, Aug 2, 12 @ 9:25 am

Comments

The average administrator in CUSD 46 makes $50,000 more a year than the average teacher. That’s also true in Senator Rezin’s home town of Morris.

In fact, administrative costs for Morris’ high school district are twice the state average.

Their elementary district not only has higher than average administrative costs, but “miscellaneous” costs of 38 percent. According to the school report card, only 31 percent of their expenses go toward instruction.

School districts have other options besides raising property taxes or cutting teachers’ salaries. And someone should start asking Rezin tough questions about the Morris school budget.

Comment by Yellow Dog Democrat Thursday, Aug 2, 12 @ 9:41 am
Rich - “Why would the district want to do that? To keep their own pension costs down.” …….I think your conclusion is more simplistic than reality. If you only have X dollars available for pay raises and a change in state law cost you X+ or X-, you no longer have the funds to cover the raise until and unless you pass a local tax hike of some sort. It is simple economics and not just a matter of now having skin in the game. Teachers will still need increases in their incomes no matter who is footing the bill for their pensions.

Comment by Kerfuffle Thursday, Aug 2, 12 @ 9:41 am
How about we in Chicago keep paying for our own teacher pensions, but stop paying for everyone else’s and let them handle it. Sounds fair to me!

Comment by Anon Thursday, Aug 2, 12 @ 9:42 am
The cost shift makes sense. I don’t understand why Chicago has had to carry the burden of its pension costs, plus contributing to costs incurred by suburban school boards composed entirely of drunken sailors on shore leave, at least where their beloved administrators are concerned.

Comment by soccermom Thursday, Aug 2, 12 @ 9:45 am
Anon - How about giving up the extra money CPS get per pupil that they received when they made this shift?

Comment by Kerfuffle Thursday, Aug 2, 12 @ 9:46 am
So when the shift the pension costs to the school districts, will they eliminate the state contributions to the Chicago system?

Comment by Plutocrat03 Thursday, Aug 2, 12 @ 9:47 am
Kerfuffle - What do you think skin in the game means?

Pretty simple really, there’s a pension problem, locals get to decide their teachers’ salaries but don’t have to pay for the pensions. Now that they have some “skin in the game”, they might think twice about what those pensions will cost.

Just like the story above.

Comment by Small Town Liberal Thursday, Aug 2, 12 @ 9:48 am
Kerfuffle- I’m sure our funding for the rest of the states pension system far outpaces a small increase in per-pupil spending…

Comment by Anon Thursday, Aug 2, 12 @ 9:54 am
How will this affect Quinn’s re-election bid I wonder. Better to get it done now and start the forgetting process asap, or does a very long phase in, frog-in-the-pot approach take care of the (political) problem regardless of when the law is implemented.

Comment by cassandra Thursday, Aug 2, 12 @ 9:54 am
Appears that the local politicians in U-46 comprehend a basic truth: Citizens hate exhorbitant property taxes, and they are inclined to vote out the local politicos if one is foisted on them, especially in tough economic times with no reprieve on the horizon. The contract term appears to involve old fashioned protect my jobism. But it also aligns the teachers and their unions with taxpayors by incentivizing them to lobby politicians for local, county and state government employee pension reform that doesn’t kick the can into the lap of local property taxpayers.

Comment by Cook County Commoner Thursday, Aug 2, 12 @ 9:57 am
The irony is that U46 has already addressed the pension side of the equation in this contract.

Look at the numbers. After taking a pay freeze for FY11 (with no steps or lanes), U46 teachers get 0%, 3/4% and 3/4% for FY12-14 (steps and lanes are in effect again but not overly generous like many neighboring districts). Since TRS assumes a 7% annual wage progression in their actuarials, this contract is a great deal from a pension perspective for the administration if they need to start picking up the pension tab.

The teachers already did their part by recognizing that there simply isn’t enough money for decent raises AND maintaining classroom teacher-student ratios. No need for the administration to terminate the agreement unless they really want a walkout.

Comment by Bluefish Thursday, Aug 2, 12 @ 10:02 am
The easiest way to get skin in the game for school districts without actually placing a huge burden on them is to have the state continue to pay the employer portion on the current salaries of current employees. The employer portion for raises and new hires would be borne entirely by the district as well as any investment/actuarial shortfalls on the raises and new hires. This would make the districts more thoughtful in doling out raises or making offers to new hires and even more so for overpaid administrators.

Comment by thechampaignlife Thursday, Aug 2, 12 @ 10:05 am
{Teachers will still need increases in their incomes no matter who is footing the bill for their pensions.}

Manufacturers reps, community bankers, truck drivers, nurses, warehouse workers, insurance salesman, carpenters, plumbers, painters, electricians, etc. may also need an increase in pay, but they cannot impose the obligation on tax payers.

All of those mentioned above; including teachers, are also local property tax payers, but the teachers can’t just expect their neighbors to band together to cover their raises, while their neighbors cost of living goes up and their ability to cover their own household expenses goes down.

Comment by Quinn T. Sential Thursday, Aug 2, 12 @ 10:07 am
@kerfuffle -

Another way of looking at it is that it gives the district leverage to force teachers to oppose the pension shift. Politically, a smart move.

Your argument assumes that there’s absolutely positively nowhere else to cut money besides teacher salaries. The district’s budget proves otherwise.

Comment by Yellow Dog Democrat Thursday, Aug 2, 12 @ 10:09 am
- Small Town Liberal - So instead of just shuffling off a tax burden from one entity to another (i.e. increasing everyone’s taxes outside of Chicago) why not just come up with a formula that says the state will cover the pension of teachers up to amount X which could be a weighted average of all teacher salaries and index that number for inflation. If a district chooses to pay a teacher X+ then the district is responsible for the additional pension cost above X. You could do the same with administrator’s salaries. That way the state would have control over costs and districts would have skin in the game without a tax increase. Granted this doesn’t solve the current fiscal hole we are in with regard to teacher pensions and school districts should get a portion of the blame but the state’s underfunding (or non-funding) had as much or more to do with it than anything.

Comment by Kerfuffle Thursday, Aug 2, 12 @ 10:14 am
Expecting taxpayers and peoperty owners to “foot the bill” for schools in whatever way is necessary is the definition of public education. Last time I looked, pouring eduction into kids minds is not a revenue generating operation. It’s all give, give and more give on the part of the Education system. Someone, somewhere needs to pay for all of that! Unless we want to disban public education, there doesn’t seem to ba any other option.

Comment by geronimo Thursday, Aug 2, 12 @ 10:24 am
It is good for the school districts to finally have skin in the game, but we still need the State to have skin in the game since they control the mandatory bennifits. If the State simply shifts the costs we risk having the fire and police pension issue that cities are faciing all over again.

Why can’t someone just introduce legislation for a 50/50 split?

Comment by Ahoy! Thursday, Aug 2, 12 @ 10:26 am
What I find ironic here is that everyone wants better schools – they just don’t want to pay for it. Folks at some point, this has an impact on the quality of education that our children are receiving. You can’t keep cutting and expect districts to provide a better education while trying to hold teachers more accountable for results. Why anyone would want to become a teacher in this state is beyond me but God bless them.

Comment by Kerfuffle Thursday, Aug 2, 12 @ 10:27 am
t isn’t so much a skin in the game scenario as a “this is the amount of available funds” scenario. They were making their deal based on current funding structure, but allowing it to be reopened if the state shifts a current state-born cost to the districts (the district are assuming the shift would not involve addition funding to the disticts, and that the shift would swamp their budget).

Comment by titan Thursday, Aug 2, 12 @ 10:27 am
Anon -

CPS used to get State $ for pensions. In 1995, Jim Edgar, Pate Philip, and Lee Daniels “gave” CPS to Richard M Daley, and as part of that deal let him spend State $ earmarked for pensions on other costs.

https://capitolfax.com/2012/07/11/todays-history-lesson/

IF CPS figures out how much the Daley diverted amount would be in current dollars, makes cuts of that amount and spends it on pensions, maybe then we can have that discussion. Until then, the premise “CPS isn’t getting State $ for pensions but downstate is” is incorrect.

Comment by Anyone Remember? Thursday, Aug 2, 12 @ 10:31 am
Keep in mind that one of the major factors affecting property values is the quality of the local school district. If taxpayers in a particular district don’t want to pay a decent wage to teachers then they shouldn’t complain when they have a hard time selling their house because no families want to move into that district.

One of the main problems with U46 is the school board has had a run of really bad, REALLY overpaid administrators. The current one, Jose Torres, had no problem accepting a huge salary increase for himself and fellow administrators then turning around and recommending a three year, 0% across the board increase for teachers.

Comment by Bluefish Thursday, Aug 2, 12 @ 10:34 am
Pam Morris’ opponent is gonna have a field day with her “kick the can down the road” quote.

I’m sure the Tribune editorial board will love it too.

Comment by Yellow Dog Democrat Thursday, Aug 2, 12 @ 10:44 am
On Chicago Tonight last night, Senator Brady said that Chicago teacher pensions are paid by the whole State, just like suburban and downstate ones are. That is not what I have been reading for weeks. Is he correct or am I missing something?

Comment by Anonymous Thursday, Aug 2, 12 @ 10:48 am
===just like suburban and downstate ones are===

False.

Comment by Rich Miller Thursday, Aug 2, 12 @ 10:50 am
Rich -

Has there been ANY official response from anyone about the Eric Zorn column you linked to on July 11th?

https://capitolfax.com/2012/07/11/todays-history-lesson/

http://blogs.chicagotribune.com/news_columnists_ezorn/2012/07/pension.html

That column makes it pretty clear that there was State $ that has since been diverted. Specifically:

“That all changed in 1995 with the deal that ceded control of CPS to Mayor Richard M. Daley. Part of the arrangement called for the Chicago Board of Education to have the flexibility to mingle education funds with funds formerly earmarked only for pensions, Ward said.”

Has ANYONE responded at all to this disclosure?

Comment by Anyone Remember? Thursday, Aug 2, 12 @ 11:02 am
I am surprised that this discussion doesn’t include the fact that property taxes are one of the most unfair taxes there is. You are penalized for having and maintaining your property with no relationship to the ability to pay. Many people let there property degrade because you pay twice to maintain it. Some upgrade property without building permits because you get slammed if they know you improved your property. Whatever the solution to the funding, I just want it based on ability to pay.

The other thing is as a taxpayer, I really don’t distinguish between all the myriad of taxes and really care about the total tax burden. Shifting the burden really doesn’t change the burden to the average citizen. Some will pay more or some will pay less. Reducing the burden in total is what we want.

Comment by RetiredStateEmployee Thursday, Aug 2, 12 @ 11:09 am
“That all changed in 1995 with the deal that ceded control of CPS to Mayor Richard M. Daley. Part of the arrangement called for the Chicago Board of Education to have the flexibility to mingle education funds….”

They did not cede control Pate, BlinkyJim & Stu Levine’s friend, thought they were pulling a fast one that would lead to a CPS strike and Daley begging Edgar for a tax hike, CPS got a “block grant” for some funding and Daley convinced folks the pensions were overfnded so a payment or two could be skipped.

No strike. No begging. No new organizing chance for — ta da — the IEA.
Blinky and company then had to turn to the
tax swap and Pate stuffed him
End of Blinky’s reign.

Comment by CircularFiringSquad Thursday, Aug 2, 12 @ 11:35 am
Kerfuffle……..not only do people want better schools, but more “professional”, higher educated teachers, but they expect them to be paid lower than union wage parts pickers.

Comment by geronimo Thursday, Aug 2, 12 @ 11:35 am
Anon - You don’t want to go down that road.

Comment by lincolnlover Thursday, Aug 2, 12 @ 11:38 am
The State has been making annual contributions to the Chicago pension fund, though the amount didn’t change for 20 years and only covered a fraction of the cost.

Even Tom Cross favors skin in the game. His version of the cost shift would force districts to cover the pension liability resulting from any end-of-career salary increases.

Comment by reformer Thursday, Aug 2, 12 @ 11:42 am
Circular Firing Squad

My point is there’s this mythology that non CPS schools get pension $ from the State, while CPS gets no $ and a fuzzy lollipop. And that just ain’t true. CPS had State pension $, and it got diverted.

Comment by Anyone Remember? Thursday, Aug 2, 12 @ 11:45 am
Skin in the game? If this all plays out teachers will have both legs and 1 arm in. Cost shift may be just a fancy term for another pay cut. All of these proposals whack the employee. Where is the legislature’s skin in the game? The elected representatives screwed this all up but the solution is just whack the employees?

Yes, there will be pressure to raise taxes, but also pressure to just cut salaries along with the financial hit employees will take from the other pension cuts. No shared sacrifice here.

The race to the bottom continues, with corporate Democrats and Republicans cheering the entire way.

Comment by random Thursday, Aug 2, 12 @ 12:25 pm
Should the shift to school district occur, property taxes are guaranteed to rise. Increasing property taxes, along with the increase in state income tax, coupled with a decrease in pension payments? Pensioners I’ve heard talking say they’ll take their lowered pension payment and get the heck OUT of Illinois. No need to give money back to anything in this state when you’ve been hit every which way possible! And as for current teachers……what are they thinking to stay in this profession?

Comment by geronimo Thursday, Aug 2, 12 @ 12:37 pm
===Pensioners I’ve heard talking say they’ll take their lowered pension payment and get the heck OUT of Illinois.===

Bye.

Also, enjoy paying state and local income taxes on retirement benefits when you go.

Comment by Rich Miller Thursday, Aug 2, 12 @ 12:39 pm
Please, let’s have folks in Decatur, Chicago and Effingham continue to support underprivileged administrators from Hinsdale Central, Stevenson and New Trier in their old age.

You know, some of those guys only have two homes and two sets of golf clubs. And do you know how much it costs to heat a pool?

Comment by wordslinger Thursday, Aug 2, 12 @ 12:50 pm
The state could save additional dollars by shifting the cost of salaries, per diems, pension contributions, and other compensation to the Legislative and Representative Districts from which each legislator is elected. No reason for a resident of a district to contribute those costs for 175 legislators that they do not have the ability to vote for.

Comment by Anonymous Thursday, Aug 2, 12 @ 1:03 pm
I’m sure your Uncle Kenny has thought about increasing property taxes and his lower income.

Comment by geronimo Thursday, Aug 2, 12 @ 1:04 pm
random
== Where is the legislators’ skin in the game? ==

The pension bill that passed the Senate, HB 1447, cuts back benefits for GARS and SERS. If it passes and is upheld, then retired legislators will lose either their subsidized health care or their good COLA, just like SERS retirees.

Anon 1:03 pm

Taxpayers around the state are already paying for their legislators via state taxes. Do you propose creating a new property tax to pay for legislators locally?

Comment by reformer Thursday, Aug 2, 12 @ 1:14 pm
All “skin in the game” is going to do is keep teacher salaries racing to the bottom and fail to attract and retain top talent to the profession.

Never mind the economic impact that this will have on Illinois economy when Springfield legislators who created this issue force school districts to cut teaching positions, increase class size, and/or freeze the salaries of several hundred thousand middle class Illinois wage earners. I’m sure that will have no economic impact on the state’s economy at all or the education of Illinois’ students.

If we want the best and brightest in the classroom then we have to stop bashing teachers for earning a professional salary while Springfield legislators happily hand out tax breaks to corporations earning billions in profit and refuses to address the structural budget deficit and regressive flat tax system.

Comment by MiC Thursday, Aug 2, 12 @ 1:14 pm
geronimo, Kenny has no plans and zero desire to move anywhere else.

Comment by Rich Miller Thursday, Aug 2, 12 @ 1:14 pm
The cost shift is constitutional and the rest of this clearly is not. When (and if) the courts declare the “choice” to be coercive and therefore not constitutional the projected cost will skyrocket. Many downstate school and community college districts will have to simply shut down or not pay. Then what? This is a terrible gamble which is going to backfire. It solves nothing and
makes the problems worse. If they are worried about administrative pensions merely cap pensionable income at the social security limit of around $110k for those not there yet. There are constitutional solutions including finding a dedicated revenue stream. Just cutting benefits is not going to do it.

Comment by Bill Thursday, Aug 2, 12 @ 1:25 pm
== Do you propose creating a new property tax to pay for legislators locally?==

No, we can use the same property tax we would be using for the teachers.

Comment by Anonymous Thursday, Aug 2, 12 @ 1:28 pm
Quinn T. Sential “Manufacturers reps, community bankers, truck drivers, nurses, warehouse workers, insurance salesman, carpenters, plumbers, painters, electricians, etc. may also need an increase in pay, but they cannot impose the obligation on tax payers.”

You are right they can’t raise taxes but when they want a pay raise they raise the price of the service or goods. What is happening in private industry is the price is going up and the additional profit is not being shared with the employee. My husband works for a company that has consistently seen the profit margin increase, but no raises, no new hires, added work and somehow the CEO and head honchos get big bonuses. I guess schools are no different, except there is a union that challenges the situation. Maybe instead of yelling about what teachers are getting maybe private industry should unionize so the company profits can be shared with the employees who did the work to get the profit.

Comment by illilnifan Thursday, Aug 2, 12 @ 1:32 pm
Bill
Madigan said the it would not be severable so it all goes-of course he could change that-
They also missed the Supremes on health care reform they made a big deal over corecian-a real big deal
Anyway we could just close down the whole state role in education. All they teach is that evil science stuff so be done with it all and give the civic club what it wants an ignorant ensalved population

Comment by western illinois Thursday, Aug 2, 12 @ 1:34 pm
Further, if legislators were paid from only district resources, the compensation could be indexed to the wealth of the district, same as with schools.

Comment by Anonymous Thursday, Aug 2, 12 @ 1:37 pm
Not sure I buy the “skin in the game” argument. I think the underlying desire to pass on the cost to school districts (and universities, by the way) is to spare the State $1.2 billion (eventually - from both schools and universities) in pension costs. That gets the State a long way to making the pension cost fit in the budget - the rest coming from reducing the pension benefits. At least once the costs are passed on, the schools have a fighting chance of offsetting to a degree by concessions in negotiations. School Districts that are limited by the Tax Cap won’t increase property taxes - unless the voters allow it.
Schools (and cities, park districts, etc.) pay the full employer cost for IMRF - and there were headlines about some spiking (recent legislation limits IMRF end of career salaries much that same as TRS, now). IMRF is in good shape - 83% funded, despite the investment losses from the recession. That’s what happens when the full employer ARC is paid every year.

Comment by archimedes Thursday, Aug 2, 12 @ 1:55 pm
Wordslinger

Think you reversed the polarities …

https://capitolfax.com/2012/01/03/the-endless-debate/

Comment by Anyone Remember? Thursday, Aug 2, 12 @ 2:08 pm
I agree with Cullerton regarding focusing first on pension reform for state employees and legislators. Trying to do it all at once means taking on every union plus suburban school districts at the same time.

Comment by Robert Thursday, Aug 2, 12 @ 2:26 pm
I don’t think Chicago has funded their pension system for a few years now and yet they still make the argument that they are.

Comment by well... Thursday, Aug 2, 12 @ 3:09 pm
Anon

You have an intriguing idea of making legislative salaries and benefits vary across the state the same way teacher salaries do, according to the property wealth of a district.

Illinois has the second largest or largest spending disparity between rich and poor school districts. If it’s good enough for our children, it ought to be good enough for the legislators responsible for the grossly unequal education spending.

For some reason, I suspect legislators from the majority of the state not blessed with a lucrative property base would find intolerable the inequality in their pay. Clever idea!

Comment by reformer Thursday, Aug 2, 12 @ 3:26 pm
{The pension bill that passed the Senate, HB 1447, cuts back benefits for GARS and SERS. If it passes and is upheld, then retired legislators will lose either their subsidized health care or their good COLA,just like SERS retirees.}

If it is upheld; it would be upheld by JRS members who would be establishing constitutional precedent for a reduction in benefits to both current employees and current retirees.

Those of you that believe that the Illinois Courts are going to find such reductions constitutional to others which could have an adverse impact on themselves, please raise your hand.

Comment by Quinn T. Sential Thursday, Aug 2, 12 @ 3:43 pm
@ Illini Fan

{What is happening in private industry is the price is going up and the additional profit is not being shared with the employee}

How about this for a crazy capitalist idea instead. Perhaps people unsatisfied with their current employment could also find work with an employee owned company and increase their net worth through the apprciation in share value as opposed to direct compensation.

Comment by Quinn T. Sential Thursday, Aug 2, 12 @ 3:51 pm
@QTS -

I think they are as likely to strike it down because they understand the Contract Clause.

Remember, any reduction of pension benefits for sitting judges can be struck down over Separation of Powers.

Comment by Yellow Dog Democrat Thursday, Aug 2, 12 @ 3:59 pm
YDD — that clause doesn’t help retired judges, and all of them expect to retire someday, so they cannot safely allow current state retirees’ benefits to be cut. When the law is clear and the judges have some skin in the game, it’s a pretty good bet which way the judges will rule.

Comment by Anonymice Thursday, Aug 2, 12 @ 4:17 pm
Judicial decisions on public policy; even when it does not apply directly to them, can be driven by overt reasoning and covert agendas.

Don’t pay much attention to what they say, but rather what they do, and how they do it. I agree with Anonymice as well; as it pertains to the separation of powers argument and its applicability to retirees vs. sitting judges.

Another point to consider is that any adverse decision with respect to current sitting judges could delay and defer their retirements.

Comment by Quinn T. Sential Thursday, Aug 2, 12 @ 4:44 pm
http://www.olneydailymail.com/news/x1602166435/Meeting-held-on-U-S-50-widening-project

Some comments on pensions and spending priorities in Olney

Comment by western illinois Thursday, Aug 2, 12 @ 5:31 pm
HB1447 is not a fix. The rating agencies should be able to see HB1447 for what it is–a simple, unworkable, unconstitutional solution to a complex problem. Two years from now when HB1447 is thrown out by the courts, the State will be in the same dismal situation, but two more years will have run off the clock.

Comment by Yossarian Friday, Aug 3, 12 @ 1:35 am
==Also, enjoy paying state and local income taxes on retirement benefits when you go. ==

False.

Alaska
Florida
Nevada
South Dakota
Texas
Washington

Comment by Julian Friday, Aug 3, 12 @ 8:09 am