Illinois’ recently passed pension reforms are tied up in court, and lawmakers have no idea when (or if) the state will see any of its savings.
The top Democrat in the Illinois Senate is once again talking about a plan that could save the state $3 billion a year: Have local schools pay for their own pensions.
“For some reason, the state is the ‘employer’ for the employer contribution for suburban and downstate school teachers,” Illinois Senate President John Cullerton said. “There’s $3 billion that goes to pay for downstate and suburban teachers’ pensions. Chicago gets $10 million.”
Cullerton is suggesting local schools pay for their own pensions.
Illinois has long talked about a cost shift, but a new move this year to also change Illinois’ school funding formula could mean this is the year for action.
“(Republicans) say ‘We got to change the school aid formula, and correct that first’,” Cullerton added. “Fine, we want to do both.”
Cullerton’s former chief of staff, now state Sen. Andy Manar, D-Bunker Hill, has a plan to lump Illinois’ $6 billion for public schools into one pile and send it out based on need.
Cullerton didn’t say when he expects the new school funding plan to come up for a vote. Lawmakers have until the end of May to approve legislation this spring.
Ben Schwarm, deputy executive director of the Illinois Association of School Boards, said local schools have heard the suggestion of a pension cost shift before.
“As we go down the road, some form of a cost shift might be discussed, and a school district might have to look at that,” but Schwarm said he’s not sure this year is the year.
Schwarm notes a new report card from the Illinois State Board of Education shows more schools than ever are in financial distress. The report card said one-third of Illinois students are enrolled in a district in financial trouble.
“I can’t think of a worse time to bring up a cost shift to local schools,” Schwarm said.
He said if lawmakers want local schools to pay for local teachers’ pensions, the state will also have to let schools decide on what those pensions will look like.
“If they would turn the entire thing over to the school district, and you could do the pension program you want,” Schwarm said. That might help schools absorb the $3 billion cost of teacher pensions. “You could do a 401(k) if you want. You could do whatever benefit selection you want.”
Currently the state sets pensions benefits, and lawmakers have refused to push for a 401(k) style retirement system despite an almost $200 million pension shortfall.
Contact Benjamin Yount at Ben@IllinoisWatchdog.org and find him on Twitter @BenYount.