from the ILLINOIS POLICY INSTITUTE
MEDIA CONTACT: Diana Rickert
Diana@IllinoisPolicy.org or (312) 607-4977
Illinois Policy Institute report supports ending state practice of paying "employer share" of teacher pension costs
If school districts combined this reform with requiring teachers to pay into their own pensions, 482 out of 866 districts would see net savings
CHICAGO (May 3, 2012) – A report released this morning by the Illinois Policy Institute outlines why it's good public policy and financially feasible for school districts to pay more toward teachers' pensions.
In April, Illinois Gov. Pat Quinn ending the state's practice of paying the "employer share" of teachers pensions to local school districts. Quinn's proposal is similar – but not identical to – a March proposal by the Illinois Policy Institute.
School district leaders have staunchly opposed this shift, claiming it would result in the program cancellations, increased class sizes, property tax increases or even "destroy" public education. However, researchers at the Institute reviewed financial information for Illinois' 866 school districts and found these claims to be greatly exaggerated.
According to the report, "Playing favorites: Education spending favors wealthy, suburban schools":
The average cost to school districts in Illinois for picking up the “employer” share of pensions would be just 3.7 percent of total expenditures.
Teachers in two-thirds of Illinois school districts pay little to nothing toward their own retirement. Instead, the school districts pay the “employee” share of retirement savings.
If school districts stopped paying the employee share, and instead started paying the employer share, then 482 out of 866 school districts would see cost savings.
Further, the 90-page report outlines why this is good public policy:
State funding for teachers' pensions favors wealthier school districts, where salaries and therefore pension costs are higher than the rest of the state.
If the state continues to pay the "employer share" of teachers' pensions, then funding and classroom aid for non-wealthy districts will be crowded out by the need to fund pensions for teachers from wealthier schools.
Under the current system, local school districts set salaries and pensions and then give the bill to the state. The governments making spending decisions are not held accountable for the costs.
Previous reports have found that state spending on TRS and teacher retirements soon will exceed classroom spending
"Today, every unit of government – from municipalities, to park districts, to Chicago Public Schools and state government – is responsible for paying the 'employer share' of pension costs. Only in K-12 education outside of Chicago is this not done," said John Tillman, CEO of the Illinois Policy Institute. "Schools hire the teachers and set the salaries that determine pensions. But right now they don’t have to pay for the pensions…the state does. That means that wealthy school districts are having their highly paid teachers’ pensions subsidized by those who are not wealthy. They should be the same as the rest of government."
The Institute's report has detailed financial information for all 866 school districts in Illinois.
The report is available online at: http://illinoispolicy.org/playingfavorites
FOR INTERVIEWS: Diana Rickert (312) 607-4977