Dist. 205 Board: Illinois Districts Soon Could Face 'Catastrophic' Financial Burden

Is it possible the state of Illinois will soon shift the burden of funding teacher pensions to local school districts?

Elmhurst Unit District 205 Board members and some state lawmakers say it's not only possible, but likely.

At Tuesday's School Board workshop meeting, board member Maria Hirsch mentioned House Speaker Michael Madigan's January visit to Elmhurst College and his comment that local school district's should pick up the cost of funding teacher pensions.

"My chin dropped," she said. "I said to the person next to me, 'Did I hear that right?' "

She said she has since learned other leaders in Springfield have made similar comments.

"I'm going to guess that there is serious consideration of the state passing along the cost of pensions to local districts," she said. "We need to pay close attention to this. This will dramatically change the fiscal outlook for school districts all over the state of Illinois."

The Daily Herald reported Thursday that 24th Senate District candidate Kirk Dillard believes this is a very real possibility, and a "bad idea." He said teacher contract negotiations at the local level are part of the problem, but punishing the taxpayer is not the answer.

His opponent, Chris Nybo, told the Herald he opposes shifting the entire burden to local districts, but agreed local school districts are negotiating "too lenient" pensions.

Gov. Pat Quinn's office is looking seriously at the issue, and Senate President John Cullerton also has suggested local school districts should pick up the costs of teacher pensions, Hirsch said.

"The state has been funding teacher pensions—or not funding teacher pensions—and having access to those resources when they need to borrow funds," she said. "They also at the state level set every rule for the teachers retirement system in terms of what their years of service are, what type of benefits they're going to receive."

Board member Chris Blum said that in fiscal year 2010, Illinois income tax payers contributed $11.8 million to the District 205 pension fund, which represents 23.3 percent.

"$12 million, and they're looking to shift that to us," he said. "And the fund is only 48 percent funded. The magnitude is very significant."

Board member Jim Collins said the effect would be "catastrophic."

"Clearly, this is an effort by the state to take (the burden) from the Illinois income tax payer and dump it into the lap of the Illinois property tax payer and then make every school district deal with that," he said. "This will have catastrophic implications for every school district in Illinois."

Property tax payers currently pay about 90 percent of District 205 revenues, with 6.7 percent coming from the state. In order for property tax payers to provide additional funding for teacher pensions, the Illinois Tax Cap would have to be lifted, legislators have said. The tax cap limits property tax increases to the Consumer Price Index of the previous year or 5 percent, whichever is lower. The CPI has never been at 5 percent since the Tax Cap was initiated in 1991. The CPI upon which local taxing bodies have based their most recent levies is 1.5 percent.

In the Herald article, Dillard said property tax bills could increase by as much as 14 percent if local districts are required to fund teacher pensions.

"This is something that has the potential to dramatically alter our financial situation," Hirsch said. "We have not taken a very proactive role in reaching out to our state legislators. This is an appropriate situation and time for us to (do so)."

But it's not likely there would be much discussion among interested parties before such a mandate, she said.

"Given the track record of Illinois, I don't think there's going to be a long, collaborative process. It's going to be something that will be sprung on us," she said. "But it needs to be stated publicly that we're very concerned."