Education Desk: Poverty Grant Funds Channeled To Teachers' Pension Costs

Oct 29, 2015

Larry McVey coordinates Springfield's Title 1 programs. In his office, he displays pictures taken while visiting members of Congress to explain how the federal funds rate affects schools.
Credit Dusty Rhodes / WUIS/Illinois Issues

Schools that serve a large number of low-income children qualify for federal grants, called Title 1. Many schools use that money to provide extra reading and math teachers, to help needy kids catch up with their more privileged peers. But the state of Illinois is increasingly tapping into those funds to pay down the Teachers Retirement System’s pension liability. 

The school system losing the most money in this scheme is Springfield’s District 186. So I asked Larry McVey, coordinator of Springfield’s Title 1 programs, to explain how this happened.

Q: For people unfamiliar with school jargon, describe briefly what Title 1 means.

A: We get money from the federal government based on our census data, and then our schools that qualify are basically all of our schools that are at 75 percent low-income or above. That's usually the same amount, which is right at 6.5 to $6.7 million every year.




Q: So Title 1 funds are federal dollars, so that means there's strings attached to that money, right? You can only spend it on certain things?

A: There's not strings when it comes to federal dollars. They're more like cables, that you have to make sure that you abide by.


Q: In Springfield, how do we use our Title 1 funds?

A: Mostly our schools choose to hire additional teaching staff for interventions.


Q: And these are certified teachers?

A: These are certified teachers, yes.


Q: So that's where we get hit with what is being called the TRS surcharge. Do you want to take a host at explaining that?

A: Basically, for all federal programs, they charge a specific amount on top of their TRS charge, to federal programs. So when i started this job, about nine years ago, within Title 1, I came in at 17 percent.


Q: So that means that a teacher hired with Title 1 funds, the school district paid 17 percent of their salary toward their pension.

A: That's correct. Yeah. And you know just in the nine years, it has doubled. So the example is, [if a teacher's salary is] $40,000, you're paying an additional $14,000 in TRS benefits for that position.

We're the only state in the union that pays this penalty for our teachers.


Q: Doesn't it have to do with the fact that we've got such a huge pension debt?

A: I'm sure that's it. We're the largest unfunded pension program in the nation, pretty much. So two years ago, the then-state superintendent Chris Koch -- he sat on the TRS board and the State Board of Education -- was able to convince the [TRS] board to vote for the federal TRS rate to be reduced to 7.7 percent. And that was the year that they had a budget problem, that they came back on May 31st and did an 11th-hour vote and the legislature had put a piece in there to re-shift that TRS burden back to the federal programs. So they kinda slid that in, because that's the only way they could've made that rate go back up, is legislative action. 


Q: It seems like the schools that would be most affected would be not Chicago Public Schools, because they aren't in TRS, they have their own pension system...

A: Right... 

Q: And not the wealthy suburban schools, because they don't come into Title 1 funds. The only people that it affects are the downstate, poorer schools. 

A: That is true. That is very true. 


Q: So here's the problem: If we weren't taking it out of the federal funds, then who would be paying the pension cost?

A: Then that would fall back to the state, the legislators, to pick up the unfunded liability.


That's right -- the same lawmakers who have left the state without a budget for the past four months.