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IEA claims cost shift could be called today

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* From the Illinois Education Association’s website…

Rumors at the Statehouse indicate Speaker Madigan’s proposal to shift the state’s costs for employee pensions to local school districts and local taxpayers could come up for a vote in the Illinois House today. This measure could drastically reduce programs and personnel in local school districts.

Please call 888-412-6570 and tell your state representative to VOTE NO ON ANY BILL CONTAINING THE COST SHIFT.

I’ve asked Speaker Madigan’s office for a comment.

posted by Rich Miller
Wednesday, May 22, 13 @ 10:51 am

Comments

Not today

Comment by Pepe Silvio Wednesday, May 22, 13 @ 10:53 am
The cost shift is constitutional and adds revenue to the pension system. If that is the way the state wants to fund its obligations, go ahead.

Comment by Bill Wednesday, May 22, 13 @ 10:58 am
Local employee costs should be paid locally. Tax caps protect property taxpayers from big jumps in taxes. Start budgeting for this now and negotiate better terms with your employees unions or reps in future contracts.

Comment by Nickypiii Wednesday, May 22, 13 @ 11:00 am
=could drastically reduce programs and personnel in local school districts===

That is the price that needs to be paid for peoples’ unwillingness to pay the costs of Education. We seem to be in a war on Education and those who provide it. All the while wringing our hands about Excellence. Ha.

Comment by Anonymous 1 Wednesday, May 22, 13 @ 11:01 am
Local employee costs should be paid locally if they can locally negotiate the terms. However, the terms of the pensions can’t be negotiated locally, so that makes it a bit difficult. It’s that much easier for the State to sweeten pension benefits that it doesn’t have to pay for. Ask any city with a downstate police or fire pension fund.

Comment by Shemp Wednesday, May 22, 13 @ 11:06 am
Locals have ultimate control over what they negotiate with their employees. They can and,in some cases actually do, consider the total cost of employment when agreeing to salary and benefit packages.

Comment by Bill Wednesday, May 22, 13 @ 11:09 am
The cited comment is confusing. Madigan’s bill is currently in the Senate (SB0001) and Cullerton’s (SB2404) bill is with the House. Which bill are they talking about?

Comment by East Central Illinois Wednesday, May 22, 13 @ 11:13 am
Not all school districts are equal, of course, but on this issue, some of the wealthier suburban ones are crying they have no bread when they’re toting a couple of Virginia hams.

My high school district, OPRF 200, this fiscal:

Revenues: $77.7M
Expenditures: $70.8M
Surplus: $6.9M

That $6.9 surplus brings the district’s outstanding cash balance to $121 million.

We pay very well. We’re not cutting offerings or activities; we’re flush.

I think we and districts in similar positions can handle a transition to picking up our pension costs.

Comment by wordslinger Wednesday, May 22, 13 @ 11:16 am
Illinois State Government already spends the lowest dollar amount per pupil out of all 50 states. This is despite the fact that the Illinois Constitution says that:

“The State has the primary responsibility for financing the system of public education.”
(Source: Illinois Constitution.)

With the shift, the State will just be reneging that much more on its obligation to be the primary funder of public education.

Furthermore, good public schools and universities are a public good that all the state benefits from. Just see how many companies want to locate in Illinois if it has subpar public schools and state universities.

Comment by Joe M Wednesday, May 22, 13 @ 11:16 am
Very few states in the country pay the full cost of public K-12 school districts, Community colleges, and Universities.

The Speaker has been around longer than anyone and even he doesn’t know why this came to be (state paying all costs). To answer that question, look at when the systems were created (late 30s early 40s). Such educational institutions were in desperate need of resources/state aid. State was in no position to provide such immediate capital, so it did what it does best, helped out in the long-term with no impact on the short term. These pension funds were a way to help the schools meet the needs of their employees and didn’t require much start up costs.

We have to keep that in mind during this discussion, the state made this commitment, but was made in desperate times and started out as a much different plan today.

It is Constitutional and will have other positive consequences on the funds.

Comment by Dirt Diver Wednesday, May 22, 13 @ 11:18 am
I am actually in favor of the cost shift, but there needs to be a provision to allow local districts to have some control (at least with new hires going forward) over the type of pension benefits.

It makes no sense to shift the costs of pension program to local school districts without giving any local control over what sort of pension benefits are given.

Comment by Anonymous Wednesday, May 22, 13 @ 11:20 am
Nothing has moved out of committee on the cost shift, right? Or did I miss something?

Comment by Rick Wednesday, May 22, 13 @ 11:20 am
not sure why that posted under “anonymous” that was actually me “biased observer”

Comment by biased observer Wednesday, May 22, 13 @ 11:20 am
Word’s right. Check out endowments at some state universities and unrestricted reserve funds at some colleges. If you want to dance you have to pay the band.

Comment by Bill Wednesday, May 22, 13 @ 11:21 am
It’s gonna hurt… No doubt about that.

Also if they cost-shift they need to do it over time and have something in there that if the state touches one time of what the districts send for this for anything else, something really, really, really bad happens. Like the entire legislature is removed (yeah I know you cant do that, but my first though involving kicks to a region of the body seemed a bit too violent)

Comment by OneMan Wednesday, May 22, 13 @ 11:22 am
Anonymous1,

It is not a war on education, it is the realization that taxpayers can’t and don’t want to support a system that allows perfectly healthy and capable people to retire @ 55 with 75% of their pay with COLA after 60. Many of those who will retire within the next few years will be paid longer in retirement that they actually worked. Why should a teacher, or any state employee, get a taxpayer subsidized retirement so generous when the taxpayers have to provide for their own retirement? We pay a larger % into SS and have to wait longer to start getting benefits and the benefits are drastically smaller, current cap is $2,600/individual. I appreciate all teachers and State workers, but I’m not feeling sorry for them. They are fairly compensated and have a very, very generous retirement package. You should be thankful for the benefits you do have.

Comment by DINO Wednesday, May 22, 13 @ 11:22 am
cost shift has potential to crush property tax poor (rural) districts. it will not be politically possible to raise property taxes in many of these districts and budgets will get crushed. people will lose their jobs because of this and educational offerings will be cut. watch the headlines if this happens.

still it is difficult to argue against the cost shift, with the caveat that the local districts get some sort of say in how the participate in the pension program.

Comment by biased observer Wednesday, May 22, 13 @ 11:24 am
Usually the IEA is not completely wrong.
But hey it is hard to be against everything and get every rumor right at the same time

Comment by Steve Brown Wednesday, May 22, 13 @ 11:35 am
Fundamental problem is Illinois Scbool funding. Property tax reliance makes for great disparities in the ability to offer quality education. Our total tax system is also pretty messed up and unfair. No one has the political courage to deal with the real problems so we continue this farce down in Springfield. Shameful

Comment by nobody Wednesday, May 22, 13 @ 11:37 am
Dirt - I know that some district in the state are flush (see Wordslinger), but many of the smaller rural districts are scrabbling to stay open. Yes, I said OPEN. There are a number that are already way, way into the red with no signs of help on the way. I spoke to superintendent the other day whose district borrowed several hundred thousand (nearly 10% of budget, and nearly hit their maximum borrowing power) just to get by this year. A cost shift without a method for districts to recover dollars will simply destroy some of our rural districts. As one superintendent stated, the only answer may be to throw the keys on the table and ask the legislature what they are going to do now?

Comment by ProblemChild21 Wednesday, May 22, 13 @ 11:38 am
=== Property tax reliance makes for great disparities in the ability to offer quality education. ===

Property tax reliance also makes it more difficult for a centralized state government to dismantle the entire system, as is happening in the State of Michigan right now.

Comment by Bill White Wednesday, May 22, 13 @ 11:39 am
My property taxes will likely go up, but I still think this is a good idea. We’ve been hearing for a long time now how school administrators get raises right before retirement in order to boost their pension. I think this cost shift will slow down that practice.

Comment by Jack Wednesday, May 22, 13 @ 11:40 am
Too often firefighters and police officers asked for and received pension enhancements from the GA; the result was an unfunded mandate on local municipalities. Tax capped municipalities have had to deal with funding their pension systems without a say for years, why not local school districts. The reality is that too many GA members want to get re-elected and depend on firefighters and teachers to campaign for them.

Comment by "Edge" Wednesday, May 22, 13 @ 11:43 am
talk about the ultimate unfunded mandate from Spfld.
I agree local control is best. I spent 10 years (1989-1999) on our local school board. Yes, I may have added to the problem, but that was the way it ran.
Does anyone really think that reversing the rules when it is convenient to the state will assure proper pension payments? The state had a obligation which they could/should have completed which would have avoided this. But they didn’t. The state could have said “enough! After this date it is on you at the locat level” This would have allowed budget, planning, and execution at local level. This did not happen. The retirees will be the ones hurt.
Our district instituted it’s own retirement program in 1992, the year before the state and local school districts started the current program. Our teachers were able to collect both, quite legally. We got through it through planning and sacrifice, but that was for a limited number of teachers in a different time….
The rules apparently are only the rules when it favors the GA and to heck with everyone else!

Comment by LisleMike Wednesday, May 22, 13 @ 11:44 am
Consolidation might be an answer for “poor” rural districts who have little or no money per some above comments.

Comment by Nickypiii Wednesday, May 22, 13 @ 11:46 am
Well, Steve, the IEA is not against SB 2404. If you could get your boss to stop playing 3D chess and arm twisting and call that bill we might actually get a fair and reasonable law that helps with the problem. I know that wouldn’t be as much fun for you, though.

Comment by Bill Wednesday, May 22, 13 @ 11:53 am
Well said Bill!

Comment by Norseman Wednesday, May 22, 13 @ 12:05 pm
Less state aid means more dependence on the tax base within each school district, right?

So what happens to school districts in the poorer parts of Illinois?

Comment by Robert the Bruce Wednesday, May 22, 13 @ 12:10 pm
I’m really surprised the Tom Cross bunch is against this cost shift. The pension debt is a huge burden that the state cannot remove through bankruptcy. But if they cost shift, the burden becomes local and can be discharged through bankruptcy. The county boards become the bad guys. The GA can cut taxes and look like good guys for a change.

Comment by Jack Wednesday, May 22, 13 @ 12:12 pm
Robert,
those districts get crushed. they will fire staff and cut offerings. effectively, this will turn these poorer districts into nothing more than pension programs.

Comment by biased observer Wednesday, May 22, 13 @ 12:14 pm
Cullerton wants a vote on his bill so Madigan attaches the cost shift to the bill and puts it up for a vote. Sounds pretty simple to me.

Comment by Mouthy Wednesday, May 22, 13 @ 12:17 pm
Nickypiii - All well and good, until you realize that there are struggling school districts in the state that are already 300-400 square miles. How does consolidation work for them?

Jack - Do you really think the state will cut taxes? Really???

biased observer - Exactly. And the Chicago/collar majority couldn’t care less.

Comment by ProblemChild21 Wednesday, May 22, 13 @ 12:21 pm
It should be simple if these perceived all powerful leaders can live up to their own legends and control their caucuses. I’ve got to get back to my two dimensional checkers now.

Comment by Bill Wednesday, May 22, 13 @ 12:24 pm
Consolidation usually means combining several insolvent districts into a single district. Result? A larger insolvent district! The notion that somehow consolidating underfunded districts fixes a structurally insolvent tax base is just plain wrong.

Comment by Disgusted Wednesday, May 22, 13 @ 12:25 pm
–So what happens to school districts in the poorer parts of Illinois?–

I can’t speak for other poor districts but I suspect mine will still plan on getting a turf football field next year.

Comment by Bobby Hill Wednesday, May 22, 13 @ 12:27 pm
You could probably just not have school during the day as long as you don’t mess with Friday Night lights.

Comment by Bill Wednesday, May 22, 13 @ 12:34 pm
Most districts are not blessed with a property tax base that provides ample funding for the basics. If IL rated better than 50th in the proportion of funding the state provides for education, then this additional burden wouldn’t be so bothersome.

Comment by reformer Wednesday, May 22, 13 @ 12:52 pm
bill, i’m just going to assume you’re joking.

Comment by biased observer Wednesday, May 22, 13 @ 12:58 pm
Actually my district isn’t poor, but it had to build significantly over the last 10 years or so (something like a new building every year there for a while), so we have a lot of bond debt to pay off that combined with shrinking home prices resulting increasing tax rates have made it unlikely that any tax increase is going to be approved soon.

We are not getting fieldturf for the football fields, I suspect we are going to make our classrooms bigger again…

Comment by OneMan Wednesday, May 22, 13 @ 1:00 pm
Dino - I agree with the payment by local taxpayers - but I would ask that you not lump everyone together - I work for the State and have not had a raise since Ryan was Gov. - and I have been furloughed -(evern on unpaid medical leave - more days were unpaid, and some years under Edgar were no raises - I am past 65 -

Comment by Marie Wednesday, May 22, 13 @ 1:03 pm
Problem Child 21: I also hope that a large portion of saving by “shifting” pension obligations back where they belong would allow for more direct State funding of education.

Comment by Nickypiii Wednesday, May 22, 13 @ 1:15 pm
Responding to Wordslinger: I actually linked the OPRF budget to this blog in response to one of your posts on the budget surplus in that district. The surplus according to the budget will decline up to 2018 when the district is projected to be in the red. That analysis was done without any shift of the state’s costs for employee pensions to OPRF so its fair to assume the district will go in the red sooner than 2018 when property taxes will need to go up yet again.

But ORPF is not the usual district, far more common is Lemont-Bromberek Community School District 113A which ISBE certified as being in financial difficulty. In FY 13 this district had an ending fund balance in the education fund of only $2.5 million. While the district had positive fund balances, they were certified in Financial Difficulty because second year Tax Anticipation Warrants (TAWs) were issued to meet cash flow needs.

Contributing factors to this fiscal problems of this district are according to ISBE:
 1.Proration of General State Aid. The district received $159,000 less in General State Aid
for fiscal years 2012 and 2013.
 2.A significant Pupil Transportation audit adjustment that resulted in the district receiving
zero Regular/Vocation Pupil Transportation funding for Fiscal Year 2013, approximately
$103,000.
3.Delayed State payments of $215,000.

Adding on pension costs to this district will cause more problem for Community School District 113A. As a Chicagoan I understand where the Speaker is coming from, but there are many, many, school districts out there which are now failing fiscally and picking up these costs even over an extended period will be very difficult.

Comment by Rod Wednesday, May 22, 13 @ 1:27 pm
A tale of two school districts, one in the Chicago suburbs, and the other in rural West Central Illinois.

EAV per student:
Naperville CUSD 203: $298,880
Bushnell-Prarie City CUSD 170 $ 64,426

Average teacher salary:
Naperville: $80,803
Bushnell: $38,100

% low income:
Naperville: 11.1%
Bushnell: 53.5%

Total expenditures per student (instruction and
operation):
Naperville: $19,633
Bushnell: $14,120

I don’t think that the shift will affect these two school districts the same.

Comment by Joe M Wednesday, May 22, 13 @ 1:36 pm
Jack @ 12:12 pm:

The State will still be responsible for paying off the past pension debt. It’s only future payments and liabilities being shifted …

Nickypiii @ 1:15 pm

See comment above. If you don’t use the freed up funds to pay off the pension debt and instead add it back into school funding, all you’ve done is RELABEL the expense so it sounds better to the voters when you pass the next state tax increase.

Comment by RNUG Wednesday, May 22, 13 @ 2:01 pm
Nickypiii - I would certainly like to hope so, but years of broken promises and foolish legislative actions made by politicians don’t make me hopeful of anything in Springfield actually intentionally helping school districts, outside of the chosen few. After all these years, my expectations out of Springfield are that the GA will not solve our problems.

Comment by ProblemChild21 Wednesday, May 22, 13 @ 2:03 pm
The downstate Illinois public school district employer contribution is less than 1% of their teachers’ salary. It may not be reasonable to ask the schools to pay the entire employer’s share of the retirement contribution, but they should be able to pay a little more than they do now, maybe 2 or 3 percent.

Comment by Ruby Wednesday, May 22, 13 @ 2:19 pm
DINO

Several of your statements are blatantly wrong. You should know your facts before you write.

Would you like to hire Dr. Kevorkian to dispose of older people? You might be one someone would like to dispose of some day.

You have bought, hook line and sinker the fallacy that benefits created this problem. Another fact: if payments had been made into the pension systems all along, no one would be having a conversation about pension debt. This is a creation of our legislators. Didn’t you know that?

I do not receive benefits so I don’t have to be thankful. Thank you.

Comment by Anonymous 1 Wednesday, May 22, 13 @ 2:55 pm
anonymouse 1:

money says you are a sock puppet

Comment by Anonymous Wednesday, May 22, 13 @ 3:17 pm
Anonymous1,
I’m not wanting to dispose of anyone and I understand that if timely payments had been made, we would not be facing this issue. Madigan is as much at fault as any, he has been there since adam and eve. The fact is, from the CMS website, with 30 years of service, you retire with 75% of your highest consecutive 48 months salary within the last 120 months and get a 3% pension increase every year, unless you retire before 60. Facts are facts. It is posible for someone to work 30 years and live 45 in retirement. If they die early, their spouse still gets 50% of their benefit as long as they live. When you compare that to the non-state employed taxpayers SS benefit, it’s very, very generous. State workers pay a smaller percentage of their salary into the system and get a larger % benefit at retirement. The maximum benefit for someone collecting SS in 2013 @ 62 is $1,923 even though they had to pay SS tax on the first $113,700 of their income. If state employes are looking for sympathy on this issue, they won’t find it from the private sector. Make no mistake, if they push pension costs down to property taxes, it will destroy downstate school systems, unless they have the ability to control pension benefits locally.

Comment by DINO Wednesday, May 22, 13 @ 4:06 pm
We either want to fix this system for the long term, or we do not. It requires at least some level of cost shifting for the future, and more local accountability for the benefits provided to local employees.

Interesting that Madigan is on the far Conservative side of this issue conceptually, has seriously burned bridges with traditional Dem allies, and still can’t get past some GOP resistence.

Comment by walkinfool Wednesday, May 22, 13 @ 4:58 pm
GOP resistance? He’s got 67 DEMS in his caucus. He doesn’t need GOP votes. He wants them so they can share the blame and maybe spare a few of his targets. None of this is about fixing anything. Its all about politics just like everything else in Il.

Comment by Bill Wednesday, May 22, 13 @ 5:03 pm
DINO, you are completely incorrect. No member of TRS or SURS can retire with “a 75% pension and 30 years of service.” Flat. Wrong. Perhaps if you checked their web pages instead of “CMS” you might have the correct info. There are teachers who live 45 years in retirement, but they are the outliers. The average time in retirement for TRS is about 29 years.
Comparing TRS/SURS to SS is a false equivalency. SS was never intended to be a primary source of retirement income. Check SS’s website if you don’t believe me. Oops, you appear to not be big on research. Is that you, Ty? Larry? PS: You also don’t understand how the AAI works.

Comment by Arthur Andersen Wednesday, May 22, 13 @ 6:22 pm
arthur anderson,

average amount in 401k at retirement (65-67) for those in public sector is around $100k.

average SS check at retirement around $1200 per month.

there is no comparison, public sector has it better with retirement currently, on average.

Comment by unbiased observer Wednesday, May 22, 13 @ 7:10 pm
Unbiased, it’s too late in the day to debate. Don’t forget all the private sector DB plans. There are plenty left. Also don’t blame the public sector for the private sector, where we all agree wages are higher, (about 3x higher in my field excluding bonuses the publics never get) for underfunding their 401ks.

Comment by Arthur Andersen Wednesday, May 22, 13 @ 8:50 pm
Sure tell me about all those DB plans in the private sector. lol We, private employees, pay a higher % into SS than public sector employees do their pension. We can’t collect till 66 without drastic reductions in benefit. Why don’t you tell me exatly what my retirement benefit would be if today I was 55, started as a teacher at 25 and made 65k the last 4 years? A lot, that’s what it would be. In the private sector, I would only be able to retire if I have money in a 401k to do so. It’s unsustainable without out a much larger wealth transfer from the private sector.

Comment by DINO Thursday, May 23, 13 @ 10:55 am