Officials ponder pieces of pension puzzle
By Susan Frick Carlman email@example.com February 19, 2013 1:12PM
State Rep. Darlene Senger (R-Naperville) led a program in Naperville recently on the state teacher pension issue. | Submitted
Updated: March 21, 2013 6:09AM
School administrators heard an update recently on efforts to address the yawning teacher pension funding gap in Illinois.
A roundtable discussion at the Naperville Municipal Center and hosted by state Reps. Darlene Senger, R-Naperville, and Tom Cross, R-Oswego, presented assorted perspectives on Illinois’ $97 billion public pension funding shortfall.
The House GOP spokeswoman for personnel and pensions, Senger is one of 17 bipartisan cosponsors of House Bill 98, one of the latest attempts to address the enormous pension deficit. The bill, also sponsored by Linda Chapa LaVia, D-Aurora, calls for increasing the retirement age for some teachers who pay into the Teachers’ Retirement System and returning cost-of-living payment adjustments to 2 percent. It also would provide measures aimed at better balancing the fund for new hires and some newer plan participants, and puts a cap on the “pensionable salary” for plan participants.
Representatives from Indian Prairie District 204, Naperville District 203 and Plainfield District 202 attended the roundtable, which included discussion from Jessica Handy, policy director at Stand for Children Illinois.
“What she was sharing was not a positive for the suburbs, necessarily,” Senger said, but she acknowledged that the agency’s proposal merits consideration.
Handy’s presentation spotlighted the pros and cons of the cost shift plan and making deep cuts in General State Aid for education.
The cost shift proposal would transfer a portion of pension funding costs onto local districts, at a rate of 0.5 percent annually. State funding cuts, officials acknowledge, hurt poor districts to a greater degree than wealthy ones.
With an eye on “funding equity,” Stand for Children is proposing that savings realized by the cost shift be funneled back into state aid.
Handy said a large part of the challenge is that discussions about pension reform and the state’s budget are taking place independently of one another. Districts need to be accorded some credit, she said, for assuming the cost shift.
“What we’re asking for is, rather than do a cost shift and then come to the budget process and ask education to take the same hit as everyone else, let’s look at General State Aid, let’s look at pension costs and make them all part of the same picture,” Handy said. “They’re all mechanisms for paying for education, so let’s look at them together.”
District 203 officials have estimated that the cost shift would increase their expenses by $600,000 annually, adding up to $14 million to $15 million over the next 16 to 18 years. Indian Prairie administrators project the expenditure increase at about $800,000 per year, while the Plainfield schools would likely feel an impact about equal to that expected in District 203.
Angela Smith, assistant superintendent for business and operations in District 202, shares the frustration expressed by many administrators over cash-strapped Springfield’s inability to follow through on financial commitments.
“In a perfect world, we wouldn’t even be talking about the cost shift, because the state would have taken care of its obligations,” said Smith. “As much as we wouldn’t like the cost shift, we’re willing to take it, if it means we get some of our General State Aid back.”
If General State Aid payments were being fully funded, the financially strained Plainfield district would have an $11 million budget surplus, Smith said. Instead, it is facing a $1.8 million deficit in the coming budget year — far less than it was before the district implemented some $140 million in spending cuts.
“Unfortunately, the only cuts that we have left have people attached to them,” Smith said.
If state aid is cut by the worst-case amount of 80 percent, District 202 would lose nearly $14 million, she said, while each 1 percent of restored state aid payments brings $695,000 back into district coffers — more than enough to cover a cost shift obligation.
“There’s lots of different iterations and what’s going to be most palatable ... most likely to pass,” Smith said.
The roundtable wrapped up with discussion of pension benefit reforms.
“If nothing gets done in regards to reforming benefits ... it could cost the school districts up to 9 percent more,” Senger said, admitting that the matter could face significant legal challenges. “The argument right now with unions is you can’t reduce benefits, because it’s constitutionally protected.”
Jay Strang, assistant superintendent of business for Indian Prairie School District 204, appears disinclined to hold his breath on pension reform progress. He pointed out that conversation about the problem has been taking place in Springfield for more than two years already.
“It’s hard to get excited about anything that comes out of there, because it keeps changing,” Strang told The Sun in December.
The frustration is not lost on Senger, who has been part of working group discussions over the past year.
“We know what we have to do,” she said.