Herald-Whig View

Shifting Illinois pension burden to school districts is no budget solution

Posted: Feb. 18, 2018 12:01 am

GOV. Bruce Rauner is again proposing sweeping changes to Illinois' public employee pension system in an effort to shore up a state budget that continues to hemorrhage red ink.

That's because decades of mismanagement and inaction by the executive and legislative branches have left Illinois with the worst-funded pension system in the nation. Pension spending now consumes more than 20 percent of the state's general fund budget, and unfunded liabilities are estimated at more than $150 billion, a staggering sum.

While pension reform is necessary and long overdue, the governor's proposal to have suburban and downstate school districts assume the state's teacher pension costs over the next four years would only serve to shift the burden, not solve the problem of benefits that continue to outpace revenue available to pay for them.

Working toward real, long-lasting solutions that would strengthen employee retirement systems and lessen the strain on local taxpayers should be the primary objective for the governor and legislators.

The cost-shift plan would require suburban and downstate school districts to pick up the tab for $262 million in pension costs the first year. That figure, based on today's dollars, would escalate to $524 million the second year, $786 million the third year and $1.048 billion the fourth year.

There are those who would argue that the idea has merit because it has been easy for school districts to award end-of-career pay hikes to teachers and administrators and send the bill to the state. Legislation from 2005 ended the worst of those sweetheart deals by capping raises at a still-generous 6 percent annually in the four years leading up to retirement.

However, shifting those costs would put school districts in the same predicament as many of the state's municipalities, including Quincy, where operating budgets are increasingly being held hostage by mounting payments to police and firefighter pensions mandated by the state.

Moreover, it would more than negate the additional money districts are projected to receive through the education funding formula approved last year to address the largest disparity in per-student funding in the nation. Ryan Whicker, business manager for Quincy Public Schools, said the district "wouldn't be able to pay for (pension costs) with our resources."

The only resort, then, for school districts would be to either raise already high property taxes to cover the pension costs, reduce programs and personnel, or both. Those possibilities should not only alarm taxpayers, but would seemingly be at odds with Rauner's repeated promises of lowering property taxes and improving education.

Clearly, the governor and legislators from both parties would be better served to engage in meaningful, bipartisan debate on more feasible solutions to Illinois' pension mess, and we urge them to do so.

Passing along crippling new tax burdens to school districts won't heal what ails the Illinois budget. The pension crisis started with poor decisions and oversight from the state, and that's where any changes must start.