Numbers hint at cost of Illinois pension shift
SPRINGFIELD – Illinois schools could see costs rise by nearly $600 million after five years of a plan to make them shoulder the expense of providing pensions for teachers, according to new figures meant to support Gov. Pat Quinn’s argument for shifting some state retirement costs to school districts.
But critics remained dubious Tuesday. They said that amount – a small percentage of overall education spending – could still force many districts to cut programs and staff or raise local taxes. They also questioned whether reliable estimates are possible with such a complex, changing issue.
“I don’t have any confidence in the upper end of those numbers,” said Michael Chamness, a spokesman for the Illinois Association of School Administrators.
Top state officials are trying to come up with a plan to strengthen Illinois’ worst-in-the-nation pension systems. There’s general agreement on the idea of cutting costs by reducing cost-of-living increases for retirees, but Democratic leaders also want to change the way Illinois provides pensions to teachers and other school employees.
Right now, state government pays the employer’s portion of pension costs for downstate and suburban Chicago schools. Only in Chicago does the local district pay the pension costs of local employees.
Quinn and Democratic legislative leaders want to shift the pension expenses to local districts over a period of years.
Quinn presented figures for two versions of the proposed shift.
Under the more aggressive version, the added cost to school districts would total $97 million in the first year and reach $580 million in the fifth year. The shift would be complete in the sixth year, when school costs would be $625 million above current levels.
Illinois schools spent about $16.6 billion in local funds during the last full fiscal year, according to the advocacy group Voices for Illinois Children. So that $625 million works out to about 3.8 percent over six years.
If you consider the shift a cut in state school aid, it would amount to a 9 percent reduction – again over six years.
“The proposal that I believe in will not hurt property taxpayers. It will help taxpayers,” Quinn said Tuesday, although he wouldn’t discuss the numbers in detail.
The impact of a cost shift is a matter of debate.
The Illinois State Board of Education released some numbers of its own – a snapshot of how much money schools had on hand. It showed that nearly 100 districts ended the last fiscal year with less than 90 days’ worth of cash reserves, meaning they have a limited cushion to absorb more costs.
The latest budget already cuts state education spending, and the state often delays payments to schools. Both factors will put more pressure on districts. The additional expense of a pension shift could push them into the red.
Republican leaders maintain discussion of a pension shift should be shelved so the state can go forward with changes that will save the state $60 billion to $80 billion in retirement costs in coming decades.
They point out that a pension shift would not lower costs. It would simply move those costs from the state to the schools, which may or may not be able to pay it.
The governor and legislative leaders are tentatively scheduled to meet Thursday to continue their pension negotiations.