Who should pay pension costs for Illinois teachers and school administrators? Currently, the state bears virtually all the cost, leaving the state’s 852 school districts free to negotiate benefits without worrying about the price tag.
As Statewide listeners heard earlier this month, the education advocacy group called Stand For Children hopes to persuade lawmakers to shift pension costs to districts by integrating them in the new school funding formula. The group’s legislative director, Jessica Handy, calls that an “equity boost.”
This week, we bring you the response from the Illinois Education Association — the state’s largest teachers union — whose lobbyist, Will Lovett, spoke with our education reporter Dusty Rhodes.
Rhodes: I know you guys are just adamantly opposed to the pension cost shift. Is that right?
Lovett: That is correct. Because we look at the shifting of pensions on the local school districts as just another way to divert resources at the local level that would have gone to help educate students. (It) would just be simply a diversion of resources that would have stayed in the classroom and local school districts and send them to Springfield.
Rhodes: So I get your point, but it would be rolled into each district's adequacy target.
Lovett: So I mean, they kind of rebranded what was a shift of the actual normal (pension) cost to local school districts and would push the normal costs to the new funding formula, and then kind of recalibrate, I guess, you know, what districts will receive.
Either way you look at it under the "equity boost" — that's what Stand for Children calls it — it's still, as (Jessica Handy) stated in her interview with you, it creates winners and losers. And the reason education funding reform was embraced was because it did not create winners and losers. It did not take from any one district to give to another. But under what Stand For Children's proposing, and Jessica stated, about 100 districts would actually lose some funding if they do this "equity boost," as they described it, or this cost-shift.
Rhodes: But I mean, you can surely admit that the pension system is in need of some reform, right?
Lovett: Well, I'm not sure if shifting who pays for pensions is considered reform. It's about who's paying the bill.
Rhodes: I mean, the way it is right now, a district doesn't really have a reason to consider pension costs, especially for administrators.
Lovett: Well, I would disagree with that, because there has been reform, if you will. You know, downstate suburban teachers, those who participate in TRS [the Teachers Retirement System], they now have what's called the 6 percent salary limitation. Downstate suburban teachers are the only teachers in the state that have that type of limitation on their pensionable earnings.
But districts do have skin in the game when it comes to salaries in excess of $180,000, or the equivalent of the governor's salary, because there was legislation passed, I believe in 2016, 2017...that any salary in excess of the governor's salary, the local employer would pay the pension costs for that salary.
Rhodes: Okay, timeout, timeout. Any salary that's higher than the salary for the governor of the entire state? That's, that's where we draw the line?
Lovett: You know, that's where the General Assembly has drawn the line.
Rhodes: Do you understand how that sounds to normal people?
Lovett: I'm just saying the current law states that the General Assembly has passed legislation to....
Rhodes: Yeah, I understand. I understand what you're saying. And you're, you're happy with it there. But to most people, that's kind of, you know, I mean, we've got superintendents with 300 kids in a district. We've got superintendents with 100 kids in a district. And as long as they don't make more than the governor... Okay, that's your argument.
What about the argument that some districts are getting $1,700 per student per year for pensions, while the average is about $500. That's fine with you?
Lovett: Well, you’ve got to look at it — and the funding reform that was passed in 2017 actually acknowledges this — there are differences. They have regionalization factors, which recognize that in some areas of the state, there’s a different cost to provide and deliver educational services.
Rhodes: So the district that I can name off the top of my head that's in the (previous) story, Rondout, where we're paying $1,773 per year per student, there's evidence that they need that? Compared to Taylorville, where we're paying about $325 per student, right? [The correct amount is $350]
Lovett: Well, I would, I would push back and say that, I mean, local school boards are elected by local voters, and they have the ability every two years to go into the voting booth and make changes to the school board if they don't like what school boards are negotiating at the local level. So, whatever is negotiated local level is done with by elected representation by local voters.
Rhodes: Right. But whatever Rondout does about electing their school board, and whatever their school board negotiates for their superintendent and their principals, it's the state that's paying a giant chunk of that pension. I don't have any voice in the Rondout school district; I live in Springfield. So I don't understand how that argument applies.
Lovett: Well, in a sense, by the state picking up those costs, it does actually alleviate some pressure at the local level with regards to property tax. And in a sense, that is one way that the state has chosen to assist with the funding of education.
Rhodes: So we created the evidence-based funding model to level the playing field and to say state funds need to run through this formula so that they'll be given out on a more equitable basis. Right?
Rhodes: The pension funds do not go through the equitable formula.
Lovett: The school funding formula has regionalization factors and does recognize that there are different costs of delivering education in certain areas of the state, and increases funding to those areas as needed, as outlined within the almost two dozen criteria.
Rhodes: Well, there's 34, so it's more than two dozen. But yes, there's regionalization. But the 34 criteria are not geographic. The 34 criteria are based on the needs of the kids, like English language learners... And if you just applied regionalization to the pension, you know... Like $500 is the average per student. Just apply regionalization factor [0.9 to 1.25] to that …..that's pretty narrow, compared to $1,700 versus $350.
Lovett: What I would go back to is my original comments in this conversation: That the beginning of the education funding model, and the discussions around its creation, started with the premise that we are not going to take away from any districts. This dramatic change would take away from some districts and would create losers of at least 100 school districts in the state.
Rhodes: All right. Do you have a different plan? Do you have an alternative proposal?
Lovett: To accomplish what?
Rhodes: To address the inequity in the pension system?
Lovett: I hear what you're saying with regard to inequities, but state is funding the same percentage of salary to fund educator pensions, whether they're in Taylorville, or Freeport, or in Decatur, or Danville or Rondout.