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Public employee unions balked at pension reform when it was introduced this spring because they claim government workers already have “paid their fair share” by kicking in “8 percent, 9 percent or more from each paycheck” to their retirement funds.
But when it comes to public school teachers in Illinois, paying their own way to retirement isn’t the norm.
An analysis by the Illinois Policy Institute of data from the Teachers’ Retirement System, the Illinois State Board of Education and hundreds of teacher contracts found that in nearly two-thirds of districts across the state, teachers don’t contribute the full “employee share” toward their pensions. In fact, most of these districts don’t require their teachers to contribute anything toward their own retirement. Instead, the contributions are paid for or “picked up” by school districts – and by extension, local taxpayers. During the 2009-10 school year alone, this little-known perk cost taxpayers more than $430 million. This subsidy is on top of what the state – and by extension, state taxpayers – pay into the teachers’ retirement funds through district-paid employer contributions and state funding. To give a recent example, in 2010, the state paid more than $2.2 billion toward TRS to cover the “employer share” of the benefits.
The finding that most teachers do not pay into their own retirement funds sharply contradicts union claims that TRS members are paying their “fair share” to the state’s retirement system, and therefore pension reform should not be enacted.
This practice began many years ago, when school districts began picking-up the cost of teachers’ contributions to the pension system. By law, teachers are expected to contribute 9.4 percent of their salaries to their own retirement fund. But in the 2009-10 school year, 555 of the state’s 867 districts paid some or all of teachers’ required contributions as an added employee benefit.
In an environment in which rising property and income taxes are eating into household budgets, and spiraling pension costs are crowding out resources that could be spent in the classroom, this arrangement is both untenable and unacceptable.
Download the full report here.Teachers’ Pensions: Who's Really Paying?
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