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* An e-mail from Rep. Dave McSweeney…
I just filed House Resolution 1267 (attached below) with 34 total sponsors. The resolution strongly opposes the local pension cost shift. The proposal has broad bipartisan support and is supported by the IEA. You can contact Will Lovett from the IEA if you want to get a comment from them.
The sponsors believe that a cost shift is unfair and would result in a massive increase in property taxes and damaging cuts to education.
Last year, Speaker Madigan made it clear that the pension cost shift is a top priority. Some of us have heard rumblings that the cost shift could come back as part of a modified education formula (eg, SB 16) comprehensive bill. Also, if SB 1 is declared unconstitutional, I believe that it’s likely that the Speaker will push the cost shift again.
We just began discussions on this effort last Friday afternoon and expect to get a meaningful number of additional members to go on record against the cost shift by signing on to the resolution.
Below is the current sponsorship team.
McSweeney (Chief Sponsor)
Lead Co-sponsors - Kay, Hoffman, Rosenthal, and Costello
Co-sponsors - Franks, Sullivan, Phelps, Hatcher, Brauer, Moffitt, Meier, Poe, Tryon, Cabello, Davidsmeyer, Hays, Mitchell, Reis, Halbrook, Sosnowski, Tracy, Bost, Hammond, Brown, Harms, Reboletti, Sandack, Wheeler, Verschoore, Demmer, McAuliffe, Pritchard, Cavaletto
* The “therefore, be it resolved” line…
(W)e state our belief that an educational pension cost shift is financially wrong and would only serve to shift pension burdens from the State to the status of an unfunded mandate
Discuss.
posted by Rich Miller
Thursday, Sep 11, 14 @ 11:26 am
Sorry, comments are closed at this time.
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Good move by McSweeney. He’s right. Unfunded mandates have to be eliminated.
Comment by Conservative Republican Thursday, Sep 11, 14 @ 11:29 am
Just in time for campaign literature.
Comment by walker Thursday, Sep 11, 14 @ 11:29 am
Is there some way to describe how this is fair to Chicago taxpayers? Is there even an effort to justify that portion?
Would opponents of the cost shift be fine with the state picking up Chicago costs?
Comment by Anon Thursday, Sep 11, 14 @ 11:35 am
They might have to work on their language a bit, for it to be intelligible. This won’t really hit the light of day, after the election.
Comment by walker Thursday, Sep 11, 14 @ 11:43 am
“Unfunded mandates have to be eliminated”
Agreed, except the problem here is local school districts decide how much to pay their teachers and administrators, including the nice golden parachutes for superintendents and then ask all the state’s taxpayers to pay for their decisions. School districts can pay their teachers whatever they want to pay them as long as they are responsible for the pensions costs associated with those decisions.
Comment by Tommydanger Thursday, Sep 11, 14 @ 11:48 am
@ Anon- The rest of the state has funded the Chicago pension, albeit in an indirect manner. Chicago receives a disproportionate amount of state funding as determined by percentage of students, percentage of special needs students, percentage of students living in poverty grant. The poverty grant and it’s implementation state-wide was manipulated to pour additional dollars into Chicago CPS.To another point, the money that is levied by Chicago top pay for the teachers pension has not been used to actually do so. That funding was misappropriated by the Daley administration to fund other things. It is no coincidence that the Daley administration and CPS experienced an unprecedented era of labor peace as salaries rose significantly during that time, but like the suburban/downstate pension system (TRS) Chicago ddi not properly fund their system and it is now in trouble.
Comment by JS Mill Thursday, Sep 11, 14 @ 11:48 am
Does he have a concept for how the State finds the money to pay for retirement of non-state employees?
Comment by Bourbonrich Thursday, Sep 11, 14 @ 11:50 am
== Would opponents of the cost shift be fine with the state picking up Chicago costs? ==
Over the years, the majority of Republicans vote against appropriating to contribute to the City’s pension costs. An appropriation that hadn’t changed in a couple decades.
Comment by Anon Thursday, Sep 11, 14 @ 11:52 am
So Republicans are for reducing state revenue — since they all oppose extension of the temporary income tax — but they don’t want to reduce state obligations by shifting the future annual pension costs to the local employers. Sounds like wanting to have you cake and eat it too.
I wonder what Rauner’s position is? If a Gov. Rauner came out for the shift, how many of these Republicans would have a sudden change of heart?
Comment by Anon Thursday, Sep 11, 14 @ 11:54 am
About time someone says take this cost-shift and shove it!
Comment by one of three puppets Thursday, Sep 11, 14 @ 11:56 am
@ Tommydanger- You might want to check your research there. All members of TRS (teachers and admin) are subject to the same pension and end of career increases. Given the number of teachers in the state versus the number of superintendents (about 850 if you do not include assistant supts that larger districts have) the cost of the 6% increase for supts is negligible at best. The impact of the 6% end of career increases (usually for 3 or 4 years) is attributable to 3% or 4% of the total long=term liability (if I remember correctly) based on Eric Madair’s research. While it is a cost it is not a significant problem as it pertains to our pension issue. Compounding COLA is the biggest driver of increased pension costs. It is probably protected by the constitution as well. Before going on about “golden parachutes” you need to understand the real economics of scale here. Some urban and suburban superintendents make some big salaries. You usually don’t hear about the ones that do not since it does not further the anti-educator agenda, just like you do not hear about the average pension which is in the mid $40,000’s. School districts also pay the mandates 9.4%, every year like they are supposed to, following the rules that were created by laws they did not pass.
Comment by JS Mill Thursday, Sep 11, 14 @ 11:58 am
Anon, why would Repubs support a cost-shift that will directly harm their districts regardless of who is the Governor.
Comment by one of three puppets Thursday, Sep 11, 14 @ 11:58 am
Gotta love Republicans who oppose local control.
Comment by Michelle Flaherty Thursday, Sep 11, 14 @ 11:59 am
It makes sense that the downstate/suburban folks don’t want to send money from their legislative districts to the Chicago machine.
Comment by Slip one through Thursday, Sep 11, 14 @ 12:02 pm
Has anyone ever identified a specific “unfunded mandate” and tied that unfunded mandate to a tangible dollar figure?
Identify a few line item examples and maybe we can actually get something done.
Comment by Bill White Thursday, Sep 11, 14 @ 12:03 pm
Flaherty,
There is no local control to the cost shift. None at all.
Will all the pension laws and the power to change them be handed over to your local school boards? No, no they won’t.
This is just a cost shift with no additional ability to control the actual costs.
Comment by Big Muddy Thursday, Sep 11, 14 @ 12:36 pm
JSMill, very good and on-point comment.
The effect of end of career pay raises, so frequently lamented by our troll from Arizona, is quite small on the unfunded liability.
I would argue though that insufficient State funding, not any benefit provision, has always been the primary driver in the growth in the unfunded liability.
Comment by Arthur Andersen Thursday, Sep 11, 14 @ 12:38 pm
JS Mill, your argument is a straw man one. None of what you said has anything to do with the idea behind a cost shift (whether it is right or wrong). Many people in Springfield think it is fundamentally unfair that local districts negotiate contracts with teachers and the state has to pay their pensions without any input. Regardless of the COLA included with the pensions or the end-of-career increases, the costs are significantly more when the educators in a particular district make more. Since these percentages are based on salaries, they become exponentially more when considered over time.
Maybe there is an argument that educators deserve to make more and deserve considerable pensions. If they do, though, local districts can decide to provide it for them instead of the state. The reason you don’t hear about those superintendents that do not make more is because they all live and work in poorer districts. The motivation behind the cost shift is richer districts take a disproportionately large amount of pension funding from the state that ends up hurting every state taxpayer.
I think there is a reasonable compromise that people could reach. Have a base salary/minimum that all educators make in Illinois and the state makes pension contributions based on that base. Then if a district wants to spend more to give their educators raises and better pensions, they can pay for only what is above the base. You’d still have the richer districts with better-compensated educators, without hurting the rural and poor districts.
Comment by Bunson8r Thursday, Sep 11, 14 @ 12:47 pm
To clarify, JS Mill, I meant your second point. Chicago is a total mess.
Comment by Bunson8r Thursday, Sep 11, 14 @ 12:50 pm
Big Muddy, how much a teacher earns in retirement is solely determined by the salary and years of service that are determined locally. Then the district passes the costs on to Springfield and says “please pay this.” I suppose local responsibility would be a better term. My bad.
Comment by Michelle Flaherty Thursday, Sep 11, 14 @ 12:54 pm
I meant to state “For more than 70 years the state HAS FAILED TO FUND their self imposed pension obligation”
Comment by JS Mill Thursday, Sep 11, 14 @ 1:06 pm
The speaker wants the cost shift. How does it NOT happen? I don’t have the answers. I do know I certainly see that a compromise is needed. Maybe this is the way to consolidate some of the 850 or so districts. Not the way that get’s trotted out typically. Linking a deficit district with one with surplus. No, I mean start with the one school districts on the north shore that are stand alone school and districts. Turn them into unit districts. But politically it won’t happen. It makes too much sense. They would rather shift the entire burden alone to all. Because alignment of curriculum from K-12 is a bad thing right?
Comment by Walter Mitty Thursday, Sep 11, 14 @ 1:32 pm
The only way this massive problem can be solved is to stop state pension obligations for new employees, and shift pension costs to school districts proportional to their staff compensation relative to state average.
For example, if the state average teacher salary is $62K, the state will pay for new pension obligations for current employees up to that amount. Anything the districts choose to pay in excess of that, including those 6% bumps for the final four years prior to retirement “spikes” and “last minute promotions” should be fully born by the districts and the employees. How much each contributes (it would be a “salary reduction” rather than a pension contribution increase)would be subject to collective bargaining negotiation. Many districts have already picked up the employee portion of the employees pension contributions in their contracts, so there is precedent here.
School districts control salaries and therefore state pension liabilities for their employees.
They broke it, they own it and have to compensate the taxpayers for their extravagance.
Comment by Arizona Bob Thursday, Sep 11, 14 @ 1:39 pm
@- Walter Mitty- nearly all Cook County districts are dual districts. and some would be ripe for consolidation however- how big do you want a district to be? The admin cost savings are not always there when you realize the personnel needed to manage districts of 5,000-20,000 students. Downstate there are some real opportunities to merge but the communities hang on to their autonomy pretty tight. The geographic size can be an issue as well. The issue becomes transportation and the increasing per cap costs to rural districts. We have districts that are over 400 square miles, kids can be on the bus an awful long time. Not saying some consolidation shouldn’t happen but there are issues to address.
Comment by JS Mill Thursday, Sep 11, 14 @ 1:41 pm
@Brunson8r
Sorry I didn’t read your post before posting mine. Seems like we’re of the same mind. Means testing to shift pension costs is the only hope going forward. The existing liabilities of over $145 billion is a massive problem in itself, but we need to stop the bleeding for new obligations first.
Comment by Arizona Bob Thursday, Sep 11, 14 @ 1:44 pm
@Az Bob- =They broke it, they own it and have to compensate the taxpayers for their extravagance.=
Nice parroting of something that has been debunked for years. Your are also wrong about “the only way to solve this massive problem”. There are many ways to solve the problems, you are not very sincere or honest.
Comment by JS Mill Thursday, Sep 11, 14 @ 1:47 pm
JS… Both Naperville districts, St. Charles, Geneva,Elmhurst Etc. have figured out the 20,000 student model nicely. I think New Trier, 211, 214, Stevenson ETC. could figure it out…
Comment by Walter Mitty Thursday, Sep 11, 14 @ 1:54 pm
Like the idea of local cost sharing, as long as it is phased in over a number of years, the impact will be minimal on property taxes. That being said, local district school boards will have to become better negotiators with unions and unions will have to be more accommodating on their demands.
Comment by Apocalypse Now Thursday, Sep 11, 14 @ 1:58 pm
@Brunson8r- those “wealthier” districts are also paying a higher proportional share into TRS.
Those “poorer” districts (depending on what you mean by that) also make up the majority, make that vast majority of districts in Illinois.The big dollar superintendents are in the minority but talking about their income gets attention.
Comment by JS Mill Thursday, Sep 11, 14 @ 2:04 pm
McSweeney might be unconsciously be doing some heavy lifting for the Speaker here in a few targeted races.
Comment by A guy... Thursday, Sep 11, 14 @ 2:13 pm
@- Walter Mitty- Again, I didn’t say they couldn’t I just mentioned some considerations. Clearly it can happen and has at times. BTW- you may want to check your numbers, only Naper 204 is 20,000 or above. Geneva and Elmhurst are well below 10k.
The ILGA commissioned a study Titled “Classrooms First” through PA 97-0503 to study the issue. Take a look and draw your own conclusions.
https://www2.illinois.gov/ltgov/Documents/CFC%20Materials/CFC%20FINAL%20REPORT.pdf
Comment by JS Mill Thursday, Sep 11, 14 @ 2:13 pm
JS… It proposes that the consolidation is voluntary.. And flawed as it links those in the black and red… I propose.. The opposite… those in the affluent area’s where it’s not winners and losers. It’s too tough politically to do the right thing.. so down we go.. until the shift..on us all.
Comment by Walter Mitty Thursday, Sep 11, 14 @ 2:26 pm
A full cost shift is a bad idea, especially since the State sets much of the costs of the pensions such as COLA, retirement age, etc. However, an equitable split isn’t a bad idea since the final salary is also part of the overall cost.
Bottom line, there is ways to be creative to ensure that districts that are driving cost increases pay more, but the full cram down is very bad public policy.
Comment by Ahoy! Thursday, Sep 11, 14 @ 2:27 pm
Not sure the legislative numbers allow the speaker to do pass this. Folks, let’s be honest. A phase in is a joke. Every year the state needs more money, they will change the phase in and take even more from downstate and suburban Illinois to plug their budget hole.
Comment by slip one through Thursday, Sep 11, 14 @ 2:30 pm
End of career salary spikes of 6% for 4 years increase the pension “base” by about 16%. Not the sole cause of the problem but it doesn’t help. Funding and control have to go together. The current system also encourages districts to push early retirement to get high earners off their books, increasing the number of years of payments by TRD. Putting the cost on the local districts would reduce the salary “arms race” but in fairness, the districts should then be able to negotiate whether to be in the TRS, do 403(b) defined contribution, or whatever. This won’t happen because the state needs the continuing revenue into TRS from new members.
Comment by Put the Fun in unfunded Thursday, Sep 11, 14 @ 3:46 pm
=This won’t happen because the state needs the continuing revenue into TRS from new members.= That is a very accurate statement in my opinion.
=End of career salary spikes of 6% for 4 years increase the pension= Generally most districts offer for three years but even this is being bargained out of some contracts. I do think increasing the retirement age to 60 or even 62 is something that can help and is doable. From the discussions last year, this was an area the unions were willing to play ball.
Due to retirements our district could save more than $400,000 next year if we hired new people to fill the spots. We are a small rural district so that is big money to us, enough to balance the budget.
The salary arms race is real in some places- Northern Cook and southern Lake County in particular. Some take pride in spending the most on everyone, I don’t know why.
Comment by JS Mill Thursday, Sep 11, 14 @ 4:05 pm
It only seems fair to have school boards who negotiate teacher contracts understand the entire cost, and that can only happen if they have to pay for their share fo TRS. On the municipal side just wait and see how many fire departments are priviatized due to the municipality not being able to pay the fire pension costs. Its unfortunate, but I dont see an alternative except to fork over more money or the unions agreeing to take a pension cut. The later most likely not to happen until several municipalities file bankruptcy or several fire departments get privatized.
Comment by Jim'e' Thursday, Sep 11, 14 @ 4:37 pm
About 2/3 of the current pension payment covers past debt and should remain with the state. The normal yearly cost (about 1/3) as currently paid by the state has a negative impact on funding equity. This is a result of wealthy districts generally paying higher salaries and poorer districts paying lower salaries. As a result generally the state is paying more per student for pension costs in wealthy districts than in poorer districts.
Those who represent poorer districts may want to look at a way of increasing equity for normal pension payments. When we ignore the state normal pension cost per student per district, we are ignoring significant “state” funding for some districts. As downstate legislators look at increasing funding for their districts, this is a concept they may want to look at.
Comment by Anon Educator Thursday, Sep 11, 14 @ 4:49 pm
@JSMILL
=Due to retirements our district could save more than $400,000 next year if we hired new people to fill the spots.=
Yeah, JS but the STATE taxpayer obligation would be far more because of your selfish actions.
If you’re a rural district (unit) your top end “retiring” salary four year basis would probably be about $80K. Without the “retirement spiking” it would be about $65K.
Assuming the teacher is fully vested and doesn’t pay “early retirement” fees of 11.5% of salary per year before regular retirement age (with about 23% of salary added by the district per year), the teacher would get a pension of about 75% of the basis rate, costing the state about $60K per year, PLUS healthcare costs.
Your New Hire would be about $40K, the full cost of this retirement would be about $100K per yearnew employee cost, pension and retiree health insurance).
You just saved 40K per year, but you cost ILLINOIS TAXPAYERS $60K per year, plus about an additional $10K per year for health insurance.
That’s a net LOSS to the taxpayers of $30K per year, plus your kids have a rookie teacher instead of a far more experienced one, so it’s a net “quality” loss for your kids and the community as well.
Thanks for the lesson in eduocracy economics, JS. Teachers win, the administration wins, the kids and the taxpayers lose.
This transaction was a cost shift from you to the state taxpayers, and you’ve been pulling this for years. It’s time it stopped, and policy makes you make good for what your selfishness has cost us.
Funny you didn’t mention this. Perhaps YOU’RE the one who’s “honesty challenged”.
Comment by Arizona Bob Thursday, Sep 11, 14 @ 4:51 pm
@ AZ Bob- well…you really stepped in it, your pompus, self righteous ignorance is evident.
1. Our negotiated agreement does not contain a 6% retirement increase.
2. Our top is $68,000 with a master’s plus 45. That equates to a pension of less than $50,000 and the state does not pay $10,000 toward insurance, teachers pay their own insurance and have been paying TRIP (Teacher’s Retirement Insurance Program) for some time and basically pre-pay a portion of the premium. 1st year teachers make $29,000 on our salary schedule/
3. You have obviously taken the “Rauner Math” course because none of your numbers are real.
4. Reading is fundamental, you should learn how or improve your skills. “could save more than $400,000 next year if we hired new people to fill the spots” if being the key word. We have been selective in the past and hired people in the 3-5 year area but have even hired people with more experience and a master’s degree. You try the “qualitative loss” argument but because you do not know the facts you look the fool.
Your childish eduocracy comments and calling others selfish aside you are just flat wrong but you do not have the integrity to admit it. Some of the things you post cannot even be contested because they do not make sense.
Our Board has held the line on costs for many years, we are actually spending less than we did 5 years ago but have found creative ways to save money and increase student opportunities. We are helping to alleviate unemployment in Illinois which is a drag on our entire community while providing a high quality education for students and not artificially inflating costs to the tax payers. Dope.
Comment by JS Mill Thursday, Sep 11, 14 @ 5:41 pm
There are ways to effectively criticize and debunk with facts and evidence — without calling someone else personally ignorant, childish, foolish, etc. A little mutual courtesy and respect is what keeps this blog healthy and welcoming.
Comment by walker Thursday, Sep 11, 14 @ 6:36 pm
==You just saved 40K per year, but you cost ILLINOIS TAXPAYERS $60K per year, plus about an additional $10K per year for health insurance.==
Wow. So teachers should work until they die? That way they won’t cost the state anything?
And I hate to break it to you, but if the state had contributed like it should have throughout that teacher’s entire career it should cost the state nothing upon retirement provided the actuaries have done their job. Teacher and state should have built a nice account of $ to pull those pension dollars from. Your method of calculation assumes there is no pension funds specifically invested into to pull money from - at that point it isn’t the state’s cash - it’s those systems’ members.
Comment by iThink Thursday, Sep 11, 14 @ 7:08 pm
@walker- Sure, when you and AZ Bob walk the talk.
Comment by JS Mill Thursday, Sep 11, 14 @ 7:43 pm
@ AZ Bob, other than the numbers JS Mill debunked your analysis is overly simplistic. Pensions are not pure taxpayer funds (whereas salaries basically are). There are the 3 elements to the pension system: 1) employee contributions, which in actual dollars increase with salary, 2) investment returns and 3) employer contributions. Since taxpayer funds make up only 1 part of the revenue sources it is impossible to say a retiring teacher costs the taxpayers $x extra a year.
Comment by MyTwoCents Friday, Sep 12, 14 @ 7:17 am