Watch Dog: Districts may save money with pension reform
May 3, 2012 (CHICAGO) (WLS) -- School districts may actually save money if the state of Illinois stops paying into teacher pension funds, according to a study released Thursday.
School districts cried foul when Governor Pat Quinn recently proposed the state stop contributing the employer's share to teacher pension funds, but the ABC7 I-Team has learned those districts may actually save money by doing so. The Illinois Public Policy Institute released a report Thursday suggesting the districts need to do their math.
"The way it should work, and the way it works for most in the state of Illinois, is that whoever hires the employees should pay the pension," said Illinois Public Policy Institute's John Tillman. "Schools outside of Chicago are getting a free ride on the backs of taxpayers by having the state pay for their pensions."
The pension system was set up to have teachers pay almost 9.5 percent of paychecks into their own retirement accounts. But public school teachers in two-thirds of all school districts don't contribute anywhere near, and many contribute nothing at all, according to the report set for release Thursday by the Illinois Public Policy Institute, a government watchdog. Instead, their school districts are picking up those payments while the state is picking up the districts payments. Tillman says this is just bad policy.
Last year, according to policy institute officials, the state of Illinois paid $800 million in teacher pension benefits that should have been paid by teachers and the districts that employ them. Illinois school districts have complained that if they have to pay the employer share they will have to cut programs and may have to raise taxes.
"What I find most outrageous is that school superintendants and the education system are misrepresenting the truth," Tillman said. "Nobody is checking the numbers... Fifty-seven percent of the districts will save money. The rest will see a small cost increase of 1 to 4 percent. That's very manageable."
The study, based on public records*, found that Illinois taxpayers are subsidizing millions of dollars in teacher pensions for one wealthy North Shore school district that already has one of the highest dollar-per-student rations. a district that has vigorously opposed making additional pension contributions from its own budget.
"This is crazy for a state that's having trouble providing basic funding levels for some of the poorest students around this state," said Tillman.
Chicago's public school district supports its own teacher pension system.
Governor Quinn says his proposed plan to stabilize the state's pension systems will save between $65 and $85 billion by the year 2045.
*The Illinois Public Policy Institute says based their report on Teachers' Retirement System and Illinois State Board of Education records.
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