Intelligence Report: Skirmish over teacher pensions in Illinois

May 3, 2012 (CHICAGO)

The verbal skirmish under way resembles an argument on the deck of the Titanic about whether it is going to rain. Both sides seem to agree the ship is sinking and there are storm clouds on the horizon.

The debate now is whether all teachers in Illinois actually contribute to their own pensions as required by law, or whether their school districts pay the contribution for them.

"Our point is the state is broke, and it's time for the teachers to start paying their share instead of the local taxpayers pay for it," said Illinois Policy Institute's John Tillman.

At the center of the skirmish is a study of public school data released Thursday by the Illinois Policy Institute. The non-partisan watchdog group says it found in public records that in two-thirds of Illinois' school districts teachers do not pay into their own pensions; the districts pick up the contribution as a contract perk.

"Right now what happens for one-third of the school districts, a deduction is made where the teacher has some of their money taken and put into their personal retirement account," said Tillman. "That's what happens for one-third of the districts. For two-thirds of the districts, that is not done, the teacher doesn't have that deduction, the school district puts the money in the pot for them and then sends on behalf of the teacher money to their retirement fund."

"They are misreading the reporting requirements," said Illinois Teacher Retirement System's Dave Urbanek. "The reports filed with the Illinois Board of Education cannot trump state law. Every school district must deduct the teachers' pension form the teachers paycheck every time they get paid."

In Springfield Thursday, the Teacher Retirement System, the state agency in charge of teacher pensions, fired back at the study.

"You have to look at it from the fact that taxpayers, wherever they are in the State of Illinois, in a school district are funding everything," said Urbanek. "They are funding the teacher's salary, they are funding the teachers' contribution to TRS, and they are funding the school district contribution to TRS. No one is paying extra for anything, and teachers aren't off the hook for paying their contributions to TRS. The taxpayers are funding everything, so it really is a wash when you look at it from a basic level."

The state official admits that some school districts do pay teacher pension contributions for their teachers as a negotiated contract perk.

A memo from Rockford's school superintendent states: Rockford teachers "currently pay nothing toward their pension. District 205 currently pays the full pension contribution each year, which is 9.4 percent of each teacher's annual salary...and the district is proposing that teachers pay less than one percent toward their pensions."

The policy institute claims that if all districts stopped paying the teacher portion of pension contributions the state pension crisis could be cooled down.

"They are going to say a lot of things, and they have a lot of disinformation out there to try to confuse things because they don't want to pay," said Tillman.

Both sides concede this is an emotional, hot-button issue, one that State Treasurer Dan Rutherford is now weighing in on. Rutherford, a Republican, released a statement Thursday saying that he stands with Democratic Governor Pat Quinn to fix the public pension problem in Illinois. Rutherford said the state is headed toward financial disaster.

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