With an unfunded Illinois Teachers’ Retirement System liability estimated at $71.4 billion, taxpayers might think school boards across the state are reining in contributing salary costs.
Such taxpayers would be wrong.
In Crystal Lake Elementary School District 47, board members approved a four-year deal earlier this year that provides eligible, retirement-track teachers with 6 percent increases over three consecutive years, or raises of 6 percent, 6 percent and 5 percent, depending on age and years of service at retirement. Other teachers in the district not on the retirement track have been guaranteed 3 percent salary increases each year.
A 10-year teacher contract recently approved in Palatine School District 15 provides back-to-back 6 percent salary increases for the four years leading to retirement for eligible teachers. A teacher entering the retirement track with an annual salary of $80,000 would be making $100,998 per year four years later.
Although neither District 47’s or District 15’s contract exceeds statutory limits, both push limits to the maximum. And despite the state’s ever-growing chasm between pension obligations and ability to pay, each is an example of a common practice in Illinois public education.
Pensions are calculated on a percentage (up to 75 percent) of the average of a teacher’s highest four consecutive years of salary within the final 10 years of service, according to the Illinois Teachers’ Retirement System website.
So larger raises at the end of a teacher’s career mean larger annual pension benefits and greater costs to taxpayers.
It’s a practice sometimes called pension spiking.
Adam Bauske is one of 11 people running for five contested seats on the Palatine School District 15 Board. When asked whether it was sustainable or ethical, Bauske pointed at the routine nature of such contract provisions.
“This contract provision is within current laws and guidelines,” Bauske said in an email. “These type of provisions, also done in other districts, provide incentive for teachers to retire and open up opportunities for new teachers. It usually provides a cost savings to the district, but also provides larger amounts towards pensions.”
A new Illinois Policy Institute report states that, on average, career teachers retire at age 59, receive $73,300 in annual pension benefits and can expect to receive more than $2.2 million in benefits during retirement.
Almost half of all state appropriations to education (excluding Chicago) are consumed by pensions. Between 2010 and 2014, 89 percent of new dollars spent on education went to retirement costs, according to the report.
In an email, District 47 board President Jeff Mason said journalists and taxpayers should focus on “the continuing budget crisis and the handling of pension funds/investments by the state government.”
“When locally elected officials receive direction on the resolution of the budget and pension crises, these will provide guidance and a possible impetus for change,” he added.
Attempts to reach the other six school board members at District 47 were unsuccessful, as were efforts to glean comment from the superintendents and community relations administrators at Districts 47 and 15.
But the responses of Mason and Bauske echo a common refrain among public school insiders: If anyone’s at fault for the pension mess, it’s the state. School boards are doing nothing unusual or illegal, and teachers deserve the increases.
Others, however, stare at the math and shake their heads.
State Rep. Jeanne Ives, R-Wheaton, said one possible solution would be putting the obligation to pay pensions on local districts rather than the state.
“It’s a guaranteed bump in salary simply to spike their pension, and there’s no accountability, no requirements to perform,” she said.
Ives said the solution, although controversial, is simple.
“What you have to do is go after these districts to be 100 percent responsible” for paying the tab on pensions rather than approving “outrageous” contracts and passing the obligation to the state, Ives said.
“Then it stops.”
• Cynthia Wolf is a freelance journalist who lives in the Chicago suburbs. She wrote this story for the Illinois News Network, an independent project of the Illinois Policy Institute.