Local Government

Illinois Rep. David McSweeney warns about teacher pension cost shift attempts

A local lawmaker is taking a pre-emptive step in the event that the General Assembly attempts in the coming months to shift the cost of teacher pensions to local school districts.

House Resolution 1267, filed Wednesday by state Rep. David McSweeney, R-Barrington Hills, opposes the idea of moving pension costs of the retirement systems for public school and university teachers from the state to the districts and colleges themselves over a 10-year period. Thirty-seven suburban and downstate House lawmakers, mostly Republican but with several Democrats, had signed on as of Friday evening.

McSweeney said he is concerned the idea could come back as soon as the fall veto session starting next month, as part of a Senate plan to rewrite the funding formula for public schools. He warned it could also arise as a potential "fix" if the Illinois Supreme Court rules that a pension reform bill passed in late 2013 to help get a handle on the state's ballooning public pension liability is unconstitutional.

"My immediate concern is [a cost shift] could result in massive property tax increases," McSweeney said. "If you are shifting a large cost, an unfunded mandate, to local government, that would impede their ability to be financially healthy."

Illinois' five state-run pension systems for teachers, college professors, state employees, judges and lawmakers have at least $100 billion in unfunded liabilities, with the Teachers Retirement System being the largest and accounting for about half of the unfunded shortfall.

House Speaker Michael Madigan and Senate President John Cullerton, both Democrats from Chicago, favor a cost shift. Madigan has said that suburban and downstate school districts and colleges have been enjoying a "free lunch," alleging that state taxpayers are paying the pensions of workers whom he said are not state employees. Illinois pays close to 90 percent of the cost for local teacher pensions.

Madigan had considered pushing for cost-shift legislation in the pension reform bill, but backed off after it became apparent that he would lose critical votes.

But McSweeney said it could come back after the Nov. 4 election, or in the January lame-duck session when the number of votes needed to enact immediate legislation drops back to simple majority instead of the three-fifths required in fall veto session. He said one possible avenue could be Senate Bill 16, which seeks to overhaul the school funding formula by making more than 90 percent of total state education funding distributed based on poverty levels. The bill passed the Senate in the last days of spring session and is now in the House.

More than 60 percent of Illinois school districts have budget deficits, according to Illinois State Board of Education data. Credit rating agency reports have indicated that a cost shift could increase budget pressures and adversely affect districts' ratings, which would increase districts' cost to borrow money.

Lawmakers return to Springfield for the veto session Nov. 19.

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