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D230: Changes to Teachers’ Retirement System Funding Would Have Detrimental Impact

A statement from District 230 on a change to Illinois' teacher retirement system that would place additional financial obligations on local school districts.

A statement from 0

The proposed shift in funding for the Teachers’ Retirement System (TRS) from the State to local school districts would be the largest unfunded mandate ever imposed by the State of Illinois on school districts. It would carry a $14 million annual price tag for District 230 and its taxpayers.

It is important for the District 230 community to understand this issue and the potential impact that shifting the State’s portion of these pension contributions onto local school districts would have on our students and community.

TRS pension covers certified employees including teachers, administrators, social workers, and counselors. Currently a TRS employee pays 9.4% of their salary into the pension system. By comparison, the typical U.S. worker pays 6.2% of their pay into Social Security. In addition TRS employees pay 1.45% into Medicare just like other American workers. The local school district pays another portion of the pension contribution and the State pays its share.

State Legislators are proposing that the portion that would typically be paid by the State become the responsibility of local school districts and in turn the responsibility of local taxpayers. In District 230’s case, the school district would be responsible for an additional $14 million per year. This would be on top of the TRS payments already being paid by employees and the school district.

While District 230 has successfully managed its finances to accommodate unfunded and underfunded mandates including driver education, transportation and special education, this additional mandate would have significant negative consequences on the programs and services available for District 230 students as well as on the taxpayers of our community.  Over the years, District 230 has managed its finances responsibly with balanced budgets and sound fiscal practices. The district has also systematically controlled expenditures and focused cost reduction away from the classroom.

If this legislation is passed, District 230’s finances will be impacted significantly. District 230 will be forced to cut personnel and programs that directly impact the quality of education that our community expects and our students deserve. District 230 would also need to seek additional revenue which could result in increased fees for families and increased taxes within our community. A systematic review process would be put into place during the 2012-13 school year to determine what expenses would be cut and what revenues would need to be increased.

Therefore, the District 230 School Board calls on our community to join us in asking State Legislators to oppose any legislation that would shift responsibility for paying any portion of the State’s share of the TRS contribution to local school districts and their local taxpayers. The School Board also asks that you join us in telling legislators that we expect them to carefully and thoughtfully engage in a dialogue with all stakeholders, including representatives of local school districts, before taking action on this topic. School district voices and those of our taxpayers must be heard.

The quality of education for our students depends on responsible decision making by our elected officials.  We ask that you call State Representatives and Senators to share this message. We will continue to provide information to help you learn more about this topic and the ramifications for local school districts.

Bob April 06, 2012 at 01:11 PM
This is a typically dishonest, self serving deception from our "friends" on the distirct 230 Board. Judge for yourself how "honest" they're being. The letter states that "a TRS employee pays 9.4% of their salary into the pension system", but that's not the case in district 230. Under the current teachers contract. DISTRICT 230 TAXPAYERS PAY THE EMPLOYEES PORTION OF PENSION CONTRIBUTIONS! That's a pretty important point that the 230 Board apparently doesn't want you to know. In fact, recent research has shown that in Illinois about 50% of school districts in Illinois pay ALL THE EMLOYEES contributions. Another 16% have the taxpayers pay part of the employees contributions. Didn't you find it curious that the letter didn't state how much the state taxpayers and the district contribute to the pensions? School districts pay a measley 0.58% of the teacher salary for pensions, and the state is responsible for the rest, which typically runs from 9 to 12% of the teachers salary. In short, the distirct can afford to either pay it's fair share to the state for pensions, or assume the employees contribution cost. Quite clearly the district 230 board would rather place the burden on the bankrupt states taxpayers rather than the union.
Bob April 06, 2012 at 01:25 PM
"District 230 would also need to seek additional revenue which could result in increased fees for families and increased taxes within our community." Actually, this isn't true. District 230 is currently experiencing dramatically dropping enrollment. Operating costs are about $13,000 per student, and about $8,000 of this is "variable" cost which should be a saving to the district. With an 800 students loss, the district should have $6.4 million to spend. It's also curious as to how the Board calculated the $14 million figure. If teh BOard stops paying the employees share of the pension contributioins and paid its fair share to the state, the change would be revenue neutral. District 230 has about a $130 million annual budget, of which about 60% is salaries. The other spending is for materials, outsourced services, and benefits. This means that even a 10% salary contribution for the district would only cost about $7.8 million, a cost that could be fully absorbed from savings due to dropping enrollment. The fact is that districts like 230 are largely responsponsible for this pension crisis we have in Illinois. They do what's know as "spiking" for retiring staff by giving 5% raises per year for their final four years before retirement. This increases the taxpayers obligation by about 20-25% over what the fair pension rate would be for "unspiked" salaries.
Bob April 06, 2012 at 01:36 PM
"Currently a TRS employee pays 9.4% of their salary into the pension system. By comparison, the typical U.S. worker pays 6.2% of their pay into Social Security." What a dishonest distortion of what's going on! An SSC employee's compensation is affected by the EMPLOYER contribitions as well as thier own, and the district knows it! For example, if a job is "worth" $100,000 per year, the employer needs to reduce the empoyee's compensation by 6.2% to account for employer SSC contributions, paying them $93,800 for a $100,000 job. The total compensation burden for the employee is 12.4%, while the total burden for the TRS employee is only 9.4 + 0.58 = 9.98%, only 83% of the amount the SSC employee pays. How do benefits compare? An SSC employee gets a maximum benefit of $22,000 per year at age 62 for a "maxed out" salary of $106,800 per year. A fully vested TRS employee with the same salary WITHOUT SPIKING would receive a pension of a whopping $80,100 per year, about 360% of the SSC benefit for paying only 83% of the cost. Who picks upo the additional costs? Obviously, the Illinois TAXPAYER! This is incredibly unfair and the ratio of contributions to benefits must be made more equitable by Springfield.
Bob April 06, 2012 at 01:39 PM
Quite clearly, this letter from the dsitrict 230 board was not meant to inform, it was meant to deceive and had a clearly self serving politcal purpose. This letter was sent throught he distirct's "e-connect" e-mail, and taxpayer resources may have been used here to further a politcal agenda contrary to the best interests of the community. Isn't this a violation of Ilinois statutes prohibiting using school taxpayer funds for political purposes?

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