Column

Olson: Repeating same pension mistakes

Kathi Griffin, president of the Illinois Education Association, delivers more than 55,000 petition signatures urging state lawmakers to remove the state’s 3% cap on annual salary increases for educators in the Illinois Teachers Retirement System on May 22 at the Capitol in Springfield.
Kathi Griffin, president of the Illinois Education Association, delivers more than 55,000 petition signatures urging state lawmakers to remove the state’s 3% cap on annual salary increases for educators in the Illinois Teachers Retirement System on May 22 at the Capitol in Springfield.

In April, DeKalb School District 428 Board members approved two four-year contracts for administrators that will give them 6% raises in each of the last years before they retire.

Both employees will begin with salaries in the six figures. With an eye toward making them eligible for the largest possible pension benefit, the district board agreed to guarantee the annual increases while also paying all of their required contribution to the pension systems.

Not to pick on those two individuals – such deals are not unique to DeKalb. They’re something to which school district employees around Illinois consider themselves entitled. No matter how much a person already earns, the prevailing wisdom among district boards, employees and unions seems to be that everyone should receive the biggest end-of-service raises possible to maximize their pension benefit in retirement.

Then they forward the bill along to taxpayers, and leave figuring out how to pay for the mounting pension debt to somebody else.

State lawmakers are on board, too. After a brief flirtation with fiscal sanity in capping end-of-career increases at 3% for teachers, this year the legislature decided to remove that reform.

The old 6% cap on end-of-career raises was restored, freeing district boards once more to pull teachers off the salary scale and award them maximum raises before they retire – and most will.

Pension benefits are determined based on a formula that starts with the average of an employee’s four highest-salaried years in the 10 years before their retirement. So district boards have made it a custom to hand out the biggest raises to the people at the top of the salary scale. That includes the two DeKalb administrators.

One of them is Finance and Business Director Cynthia Carpenter. She’ll earn $154,000 next school year, and each year she’ll get a 6% raise. When she retires in June 2023, her earnings will have grown almost 20%, to $183,600 a year.

Another is Elementary Curriculum Coordinator Kimberly Lyle, who will earn $106,200 next school year. After three consecutive years of 6% raises, she’ll earn at $126,552 when she leaves after the 2022-23 school year.

In addition, the school district will pay all of both employees’ retirement contributions.

Have Carpenter and Lyle done a good job? Probably. I don’t know. Their compensation is no longer based on merit, anyway – so long as they don’t do anything so egregious that their contracts are terminated, they’re going to get big raises every year until they retire.

After retirement, the annuity payments those employees – and thousands of others – receive will increase 3% annually, no matter if the economy is expanding or in the depths of a depression.

It’s just guaranteed, with no risk.

It’s like magic.

Only there is no magic, and there is risk for a lot of us. Illinois’ unfunded pension liability for public employee pensions is now at an impossibly high $140 billion, and it will continue to grow.

The state’s finances are out of balance, and while state legislators deserve their share of blame, so do local school district boards. Solving this problem will require more than just “new revenue” – it requires a change in behavior.

The legislature tried to require that, only to change its mind after being told by union lobbyists that the tighter cap on end-of-career raises had to be repealed “to help save the teaching profession.”

It seems impossible that this can continue forever. One day, there may well be a reckoning.

It could come in the form of a change to the state constitution, a decision to tax retirement benefits, a statewide property tax or some other onerous remedy.

If it does, those of us who remain in Illinois will be left to wonder why our elected officials didn’t make different choices when they had the chance.

• Eric Olson is general manager of the Daily Chronicle. Reach him at 815-756-4841 ext. 2257, email eolson@shawmedia.com, or follow him on Twitter @DC_Editor.

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