Kadner: Gov. Quinn pushing hard for teacher pension shift
Phil Kadner email@example.com | (708) 633-6787 August 8, 2012 10:34PM
Updated: September 10, 2012 1:40PM
Gov. Pat Quinn is going to try again next week to shift the cost of teacher pensions from the state to suburban and downstate school districts.
Quinn has called a special session of the Legislature for Aug. 17 to deal with the $83 billion state pension crisis.
On Wednesday, his budget director, Jerry Stermer talked for an hour via conference call with the editorial board of the SouthtownStar in an attempt to persuade this newspaper to support the governor’s plan.
Readers know where I stand. I believe many Southland school districts would have a difficult time coming up with the pension money. In addition, area homeowners and business owners are already shouldering a property tax burden that is suffocating economic growth.
But Stermer’s arguments are compelling, and you ought to know what they are.
The cost to the state of funding pensions for suburban and downstate teachers has risen from 13.6 percent ($1 billion) of the overall education budget in 2008 to 27.3 percent, or $2.4 billion, in 2012 and will climb to $2.7 billion in 2013.
That means fewer dollars available for public education, Stermer said, and the situation will only get worse with time. He said less state aid to schools will cause property tax bills to increase more dramatically than any shift in pension funding would.
Illinois ranks dead last among the 50 states in the percentage of state funding for the overall cost of public education. The bulk of that cost is paid by local taxpayers, even though the Illinois Constitution reads that the state “has the primary responsibility for financing the system of public education.”
But just as they have ignored their obligation to fund teacher pensions, our state’s elected officials have failed to adequately pay for the public schools.
To counter the argument that a pension cost shift would increase the property tax on homeowners, the governor now says that cost will be spread out over 12 years instead of three or four, as has been discussed in the past.
Quinn says that would result in only a small increase in costs each year for school districts, allowing them to absorb the pension payments without a property tax increase.
Furthermore, Quinn proposes that teachers contribute more from their paychecks toward their pensions and make a tough choice: get pension credit for their pay hikes in their final years of teaching and state-supported health insurance in retirement or keep the annual, 3 percent cost-of-living raise while retired. Quinn says these options would reduce the pension expenses that local school districts would have to absorb.
Stermer said school boards could negotiate the cost of the pension shift with teachers unions during contract negotiations, implying that teachers would be willing to take smaller raises.
The governor’s argument is underlined by the fact that the cost of teacher pensions is determined by their salaries, which school boards now approve without worrying about the payroll’s effect on pension costs.
All of those arguments are persuasive, if you forget the entire history of public school funding in Illinois and the outright lies told by elected officials to citizens over decades.
When you look at the big picture, the failure of the state to adequately fund public schools, the fabrications about how lottery money was used, the promises that income tax revenue would finance public education and a litany of broken election-year pledges to help the schools, it’s hard to believe taxpayers won’t get stuck with bigger bills from the pension cost shift.
Stermer, who impresses me as a nice guy trying to do a difficult job, says I’m too cynical. There’s a real financial problem facing the state, he says, and it must be addressed.
I would respond that a cynical person would believe there’s no reason to fund the state’s pension systems at 100 percent, as the governor plans to do, and this is all about appeasing the bond rating companies.
If union pension benefits were cut in all five pension systems, the financial crisis would be resolved, but politicians don’t want to battle the unions.
That’s why school districts, if the pension shift occurs, would be obligated to fully fund those pensions, and that’s why the teachers unions have indicated they might accept such a shift.
No matter how much money it saves, this state will not dramatically increase school funding to the suburbs. The Chicago Public Schools, which finances its teachers pensions and won’t pay anything more under Quinn’s plan, will see a financial windfall as a result of the cost shift.
I believe if Quinn’s reform plan passes, your property tax bill will go up. The governor makes no promises to the contrary.