Rauner Proposes Shifting Teacher Pension Payments to Local Taxpayers

Headline in Chicago Tribune internet edition shortly before Governor Bruce Rauner gives his budget message.

Bruce Rauner

To lessen the ongoing burden of paying pension costs of retired teachers, Governor Bruce Rauner wlll support House Speaker Mike Madigan’s idea to force local school district taxpayers to foot the bill.

That’s what the Chicago Tribune is reporting today.

Having the Governor endorse the shift probably means higher local property taxes in the future.

That also means school boards granting higher teacher wages would be committing future taxpayers to paying pensions based on those higher salaries, which is not the case now.


Comments

Rauner Proposes Shifting Teacher Pension Payments to Local Taxpayers — 26 Comments

  1. Every homeowner, property owner in Illinois, especially those owners who ARE NOT retirees from the government public sector should, no must, read and understand the totally outrageously huge pensions of many government retirees. Here is a source for that information:

    https://www.bettergov.org/pension-database

    Rauner is nuts for expecting that already overburdened homeowners, property owners need to bleed even more in paying for pensions for teachers, administrators of school districts.

  2. Until we can make changes to the over promised pensions, then this is not fair.

    If you want to move the pensions to the local, then we need to be able to vote on all aspects of the system.

    Who cares?

    I just saw a bunch of new homes come up for sale on my drive to the train station.

  3. @ bred winner

    ANSTAAFL – Ain’t no such thing as a free lunch!

    We, the homeowners & taxpayers, are going to get stuck with this regardless of WHO has to pay the bill; the state, the local unit of government. The problem was created by the legislature and no matter how they choose to repair (fund) it it’s coming out of our pockets. Local units take the position “the state will take care of it” and that, as you know, is BS. Anything the state gives, comes out of our pockets.

    Who are they kidding.

    The only advantage (if there is one) to this plan is that locally, the finger pointing will cease.

    The raises given by the local boards will have an immediate effect on tax liability and they cannot point the finger to the state (well, they CAN and probably will) but at least we’ll know where to go when we pick up the torches and pitch forks and start gather the tar and feathers, or maybe a stout length of rope! ๐Ÿ˜‰

  4. Scroll down through the list of retirees at bettergov.org and look at the absurdly high pension amounts. At the top of the list is a person who will receive $494,773 in pension money in the year of 2017. This same person collected $426,885 in 2012. The average yearly increase in that person’s pension over those years was about $13,600. Can anybody of reason and sound mind explain why a person receiving
    $426,885 in 2012 needs yearly COLAS to up his/her pension to $494,773 in 2017?

    There are other and numerous retirees receiving absurdly high pensions in the $100K, $200k, $300k and $400k ranges. Why in the h*** do they need COLAs? How crazy is the pension formulas that anybody even gets say over $200K? Why not a cap at some level and no COLA?

    This is not sustainable. Illinois is already in a crisis stage fiscally and the worst State in the U.S. fiscally. Home values will continue to decrease and there will be an acceleration of people leaving the State.

    Something drastically needs to be done to adjust the compensation, benefits, and pension system.

    As a side note, we have heard nothing from the liberals, bleeding hearts, Democrats who are always complaining about rich and equal pay and the poor ad nauseum. They are silent about rich retirees of government getting from $100K to $495K per year in pensions.

  5. Final nail in the coffin of County taxpayers.

    Home values will remain stagnant at best, plummet at worse.

    Thank you Madigan-Rauner you guys make a great team for the taxpayers.

  6. Cal – Turnberry and Bard road has 2 new homes up for sale.

    I also know 2 of my neighbors listing in the next couple of weeks.

    Both of my neighbors are moving out of state as they no longer are willing to deal with IL taxes and figured it’s best to sell now before the market gets even more crowded and values drop further.

  7. I don’t have any problem with this if the State is only shifting future TRS liabilities on to the local school boards – that’s the way it should have been all along.

    The current system encourages end of career raises and higher pension costs because someone else is footing most of the bill for them.

    The State should not be allowed to get away with shifting any of their unfunded liabilities to the local school boards, though.

    The State would not use those ‘savings’ to reduce the deficit, they’d simply spend them on something else, and the taxpayers would be twice screwed.

  8. Here is the relevant information from the Budget Book:

    “In fiscal year 2019, universities, community colleges and school districts would begin to pick up 25
    percent of the normal pension cost for their employees who participate in SURS and TRS.

    Then, over the next three fiscal years, they would pick up an additional 25 percent each fiscal year until they become fully responsible for the normal pension costs related to their employees.

    The total cost realignment in fiscal year 2019 would be $363 million. “

  9. I propose Rauner pay a $45 million dollar tax for those excellent Chicago Public Schools!

  10. People, whether it’s the “State” or the “local school districts”, in aggregate it’s the same group of taxpayers — all of us!

    But too many voters think if “the State” pays, somehow it’s free money from other people and doesn’t come out of their pocket.

    By making the liability local and very personal, it might actually encourage taxpayer backlash sufficient to finally result in changes to the pension system.

  11. D155 should quickly begin the consolidation of high schools.. get in front of this now!

    Scott – how do we get you to run for D155? ๐Ÿ™‚

  12. After some quick research, it appears that the “normal pension cost” for current TRS employees has been running at 9.85%, with the employee contribution rate pegged at 9.0% (Total 18.85%).

    The Rauner plan would phase in the 9.85% hit over 4 years.

    My estimate as to the impact on D26’s annual operating expenses is that this will add another $1+ million to our cost structure.

    As to the D155 impact, my rough guess is in the neighborhood of $4.5 million annually by 2022, assuming there isn’t a school closure.

  13. D47 provided some information a bit back that they are paid 168% of the median salaries. There is A LOT of fat there that can be chopped off to save current and future dollars. Schools are average at best based on my experiences with my kids.

  14. And many people think townships are a problem.

    They are a drop in the bucket compared to teacher and all the rest pension schemes in the lovely state of Illinois.

    Dysfunction at it’s best^

  15. Coffey, that extra million + would mean what to dist 26 homeowners?

    I agree with Willson also.

    Them control of levies by us voting on them regularly would make a big difference.

    At least we could control the $$$ we pay.

  16. Nob, it means continuing to remain aggressive on cost controls, re-visiting our BA-0 hiring strategy, ongoing facility maintenance may have to be deferred, and the Maplewood sale/development becomes critical in freeing up operating costs that we’re just burning up today as well as adding significant, critically needed new revenue to offset the pension hit.

  17. Coffey, if all pension payments come directly out of total comp, how much will the levy need to be raised so no deferred maint.
    What would a average homeowner expect to see as a increase in property taxes?

  18. Nob,

    1) The Board needs to continue diligently maintain tight cost controls (i.e. Labor, Benefits, headcount, etc.), and

    2) If the Maplewood property sale goes through, the new construction will bring in new property tax revenues just as the pension shift hits high gear.

    We have been anticipating the pension shift for several years and incorporated it into all of our 5 Year financial plans.

    I don’t foresee any reason why D26 would need to go to a referendum to ask for a limiting rate increase to pay for the pension shift.

  19. Sadly, I absolutely agree with Billy Bob’s insights.

    He’s absolutely right that unless the state agrees to increase local funding by a like amount, or cut taxes by a like amount, shifting the pension burden to local school districts will simply result in higher taxes.

    Frankly, I hope they go the route of cutting state taxes and permitting local school districts to increase taxes.

    It’s the only way we’ll finally get the voters to rear up on their hind legs and say, “Enough!”

    As long as everybody thinks it’s the “state’s” problem and doesn’t see how local school districts are creating the problem, the voters will continue to ignore and deal with the cause.

  20. I am for the School Districts, Teacher’s Union to take this on . . . they have always blamed the State.

    Now we can Hold the School Board, Administrator’s and the Teacher’s Union responsible and accountable.

    The Parent’s just might go on strike.

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