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* Dusty Rhodes interviews Jessica Handy about state funding of suburban and Downstate teacher pensions…
Rhodes: Okay, so let’s look at figures for some of the districts. Take Danville. How much do we pay per student in pension costs for Danville?
Handy: Danville gets about $500 per student.
Rhodes: Where does that put them on the spectrum of how much we pay for pension costs in different districts?
Handy: That’s actually about average. You’ll see that Rondout, which — it’s one of the richest districts in the whole state, and the state is giving them an in-kind benefit of $1,700 per pupil. So Danville gets about $500 per pupil; Rondout gets about $1,700 per pupil.
Rhodes: What about a really poor district, like East Aurora?
Handy: East Aurora gets about $280 per pupil.
Rhodes: You know, anyone who listens to our station has heard many times that the State of Illinois has a very inequitable funding system, because it’s based on property taxes. We talk about the amount of “general state aid” that goes to each district. In that conversation, are we talking about these pensions? Or is that a separate conversation?
Handy: It’s an entirely separate conversation. Lots of the analyses that have been done by national think tanks — people who have said Oh, Illinois, you have one of the most inequitable school funding formulas — most of those studies don’t even count the funding that’s going into teacher pensions. So we are even more inequitable than the studies that say we’re the most inequitable.
The bottom line is if your school district can afford to pay teachers more money, then your state pension subsidy is automatically higher.
…Adding… Hmm…
What's wrong with Illinois public schools explained in one chart. via @advanceillinois pic.twitter.com/5wcIV0NFqW
— Matt Bragg (@mattwbragg) March 21, 2017
posted by Rich Miller
Wednesday, Mar 22, 17 @ 11:28 am
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NOW I understand why the suburban Republicans were so opposed to the cost shift idea.
Comment by Michelle Flaherty Wednesday, Mar 22, 17 @ 11:30 am
This is news? In almost any pension plan if you are paid more you get a higher pension.
Comment by winners and losers Wednesday, Mar 22, 17 @ 11:47 am
Just for my own knowledge: Is there a study somewhere of what would be the best way to fund education and make it fair to children and adults alike. Being born and raised in Illinois and in DuPage property tax is all I know. How do other states that have comparable populations fund schools. The money has to come from somewhere. Was there a study done in 1970 when the Illinois Constitution said the state should be responsible for most of the funding or was that just a snow job to get it passed. Somewhere that has to be a plan that works
Comment by DuPage Saint Wednesday, Mar 22, 17 @ 11:51 am
Winners and losers: state taxpayers pick up the employer contribution for every school district except CPS, so in a debate about what to do with scarce state resources it’s newsworthy to point out that the wealthiest school districts get the biggest pension subsidies from state taxpayers.
Suburban welfare has a nice ring to it.
Comment by Michelle Flaherty Wednesday, Mar 22, 17 @ 12:14 pm
=The bottom line is if your school district can afford to pay teachers more money, then your state pension subsidy is automatically higher.=
This is absolutely true.
@Michelle Flaherty is correct as well.
The wealthy districts, and by wealthy I mean districts that are funding most of their costs locally through local property taxes, are typically getting state funding based on the “Flat Grant” formula.
That is $218 per pupil plus MCAT’s. They are probably getting very little through Federal grants.
Where they do get real funding is through the state pick up of the employer pension payment.
I have mentioned this to a few people when they complain about paying high taxes and then getting very little from the state.
But, some of the “poor districts” pay very well. Maybe not as well as New Trier, but good money and so does CPS.
Where CPS benefits is through the large CPS Block Grant which funds them at a rate much higher than they would get if they went through the formula like everyone else.
The Block Grant amount has usually (not always) gone up even as their enrollment has gone down (enrollment, attendance, poverty, and local capacity are the biggest factors in school funding).
That puts CPS in a position where they are getting a disproportionately large share of state funding even with the pension offset (which CPS wanted control of).
CPS has huge needs. But ask them for a number. What would get the job done? they would likely say “more”.
Comment by JS Mill Wednesday, Mar 22, 17 @ 12:37 pm
A district like East Aurora gets a huge poverty grant bump that more than offsets the lower pension money.
A suburban school like New Trier is getting zero poverty grant dollars per student where East Aurora is getting $3,600 per student based on enrollment. Plus they get big money in their lunch program because every student qualifies for free lunch and breakfast (happen when poverty reaches a certain threshold).
Bottom line- “poor schools” (really community) can get $10,000 or more per pupil from the state and these wealthy districts are looking at $700 to $1,500.
Then there are federal dollars that get layered on top of the state money.
Comment by JS Mill Wednesday, Mar 22, 17 @ 12:42 pm
JS Mill, the state is contributing essentially 50% of New Trier’s payroll to TRS on its behalf.
My guess is that ends up being more than $700/pupil.
Comment by Juice Wednesday, Mar 22, 17 @ 12:57 pm
Juice,
How do you get to 50 percent of payroll? That number doesn’t seem reasonable.
Comment by Last Bull Moose Wednesday, Mar 22, 17 @ 1:04 pm
= contributing essentially 50% of New Trier’s payroll to TRS on its behalf.=
Your math is way off.
The state is contributing the “employer” share to TRS.
Although the amount varies based on actuarial assumptions is it in the 7% to 8% of TRS payroll.
That means most of the district employees (support staff including aides, custodians, and other non-TRS personnel who usually outnumber teaching and administrative staff) are not a part of the payment.
Fro TRS staff, the district or the teachers pay 9.4% of eligible payroll to TRS.
The state pension pick up is not small potatoes by any stretch. But isn’t 50% of payroll or even of the total TRS payment.
Comment by JS Mill Wednesday, Mar 22, 17 @ 1:11 pm
JS Mill, you are only focusing on the normal cost, which is not the entire about that the State is contributing to TRS.
The total certified contribution is around 45% of payroll, with the bulk of that being towards the unfunded liability.
Granted, this is primarily the fault of the State for improperly funding its pensions over decades. I don’t think we would disagree about that.
But I would add the paying for the unfunded liabilities, which includes making sure that the resources are there for teachers who are already retired, is of a benefit to school districts as well, not just the normal cost. (Not saying the State should shift the full freight to districts, just that the benefits go beyond this year’s normal cost contribution.)
Comment by Juice Wednesday, Mar 22, 17 @ 1:25 pm
Each school district also contributes 0.58% as
part of the employer portion of the pension contribution. What might make sense would be to charge a premium on top of that to school districts whose salaries fall above state average, maybe in tiers. So New Trier pays 2.58%, Tinley Park 1.58%, etc. It would also provide much needed transparency in how your school district stacks up to others.
Comment by City Zen Wednesday, Mar 22, 17 @ 1:56 pm
Who is the State paying the unfunded liability on behalf of? The school district. The total FY18 contribution by the State to TRS as a percentage of payroll is 43.72%. Big potatoes.
Comment by My button is broke... Wednesday, Mar 22, 17 @ 1:58 pm
Juice is mixing something in his juice- the UNFUNDED liability is a state cost created by the state and not the result of ANYTHING the district did. Stop shifting blame with the cost shift, not fair assignment of the cost. The normal cost is just over 9%…spin, spin, spin……
Comment by Elliott Ness Wednesday, Mar 22, 17 @ 2:14 pm
I don’t get why people talk about the taxpayers having to pay this or that ( salary, pension, unfunded liability, etc.). As long as these schools are public schools, who the ****else would be paying? Of course the taxpayers pay for the educational services they and their children receive! Why such ominous sounding stuff, as if it’s just so unfair?
Comment by Anonymous Wednesday, Mar 22, 17 @ 2:27 pm
Juice, you’re confusing two issues. The TRS federal rate is 45%. That hits poor districts who get a lot of Title I funds. New Trier doesn’t get much of that. HB 656 would fix this. It’s just for federally funded teachers though. The broader inequities in how teacher pensions are funding remain.
Comment by J Wednesday, Mar 22, 17 @ 2:28 pm
Elliott Ness, first of all, I said the unfunded liability was primarily the fault of the State, so chill out.
But don’t think the districts had nothing to do with it. There have been a ton of end of career salary increases built into teacher pay schedules, especially in wealthy suburbs, because they know someone else is going to pick up that tab, and that most definitely has contributed to the size of the State’s unfunded liability.
Comment by Juice Wednesday, Mar 22, 17 @ 2:30 pm
J, the federal fund rate is the same rate that the State contributes to TRS for teachers who are not paid from federal funds.
Comment by Juice Wednesday, Mar 22, 17 @ 2:34 pm
=J, the federal fund rate is the same rate that the State contributes to TRS for teachers who are not paid from federal funds.=
The TRS employers share (paid by the state) is not the same as the federal rate.
The state pays the same rate wheter or not the teacher is paid from federal funds. Because they refer to it as the federal rate does not mean it is required by the federal government or paid to the federal government.
The increased “federal rate” was a way to get an increased TRS contribution and help offset the TRS under funding.
Most districts learned that you don’t ppay teachers from federal funds years ago. Yes, it is a shell game, but it preserves resources.
=There have been a ton of end of career salary increases built into teacher pay schedules, especially in wealthy suburbs, because they know someone else is going to pick up that tab, and that most definitely has contributed to the size of the State’s unfunded liability.=
Eric Madair addressed this very issue in his longitudinal study and stated (based on actual numbers) that end of career increases were responsible for 3%-4% of the total amount of the unfunded liability.
Politicians like to play that up, but ask them for numbers and they cannot give you any as they like to leave the impression that it is a major cause.
=JS Mill, you are only focusing on the normal cost=
That is correct. The debt is a separate issue altogether, whether or not you want to accept that fact. Some of the debt is principal, some is interest, some is the result of pension obligation bonds borrowed to do something completely unrelated to education. The interest and bonding debt cannot be laid at the feet of schools. We followed our obligation whether we liked it or not.
=The total certified contribution is around 45% of payroll, with the bulk of that being towards the unfunded liability.=
See above. But I would also like to see the data or data source cited and exactly who’s payroll?
=Who is the State paying the unfunded liability on behalf of? The school district. The total FY18 contribution by the State to TRS as a percentage of payroll is 43.72%. Big potatoes.=
The debt is not being paid on behalf of the school district. It is being paid for the state since they have failed to meet their obligations and diverted funding as well as borrowed againstthe pesnion for non educational “needs”.
Comment by JS Mill Wednesday, Mar 22, 17 @ 3:32 pm
The more I read this stuff the more confused I get. I wonder if anyone actually knows who is paying what and where it is really going. Something without smoke and mirrors and magic assumptions
Comment by DuPage Saint Wednesday, Mar 22, 17 @ 3:45 pm
This might have nothing whatsoever to do with this all, but since many IMRF employees now work in schools (and in many schools, they outnumber the teaching staff), and payments to IMRF may not legally be deferred, could this mandate to pay into IMRF be straining schools’ budgets?
Comment by Anonymous Wednesday, Mar 22, 17 @ 4:08 pm
Claypool is right.
Comment by Teve Demotte Wednesday, Mar 22, 17 @ 4:12 pm
==end of career increases were responsible for 3%-4% of the total amount of the unfunded liability. Politicians like to play that up, but ask them for numbers and they cannot give you any as they like to leave the impression that it is a major cause.==
4% of $120 billion is $4.8 billion. I’d rather have that money eventually go to social service providers than someone’s immorally increased pension.
Comment by City Zen Wednesday, Mar 22, 17 @ 4:15 pm
==could this mandate to pay into IMRF be straining schools’ budgets?==
If paying the actual cost of their IMRF employee benefits is “straining” the budget, then costs should be controlled through smaller raises or passing on higher health care costs to the employees. Compensation is compensation…if pensions eat up a larger chunk of the package, the other portions should get smaller.
Comment by City Zen Wednesday, Mar 22, 17 @ 4:23 pm
@City Zen- your assertion that a raise is “immoral” is ridiculous. Not everyone receives the 6% end of career bump either.
To think that the money that the state owes the pension as a result, would have gone to social services is either naive or simply dishonest.
The amount you divined is inaccurate as well. TRS underfunding is not $120 billion. So your math is way off as well and inflated.
Try to know the facts before you post.
IMRF is levied for and has its own funding stream as does Social Security as you can usually see if you look at your tax bill. PTELL districts could be an exception.
Comment by JS Mill Wednesday, Mar 22, 17 @ 6:01 pm
Like higher ed, K-12 needs to be reigned in.
Comment by Blue dog dem Wednesday, Mar 22, 17 @ 8:57 pm