State is to blame for 'pension spiking' in D86

 

Last updated 2/17/2021 at 4:31pm | View PDF



The middle of a pandemic is a tough time to approve a new teachers contract.

So is the middle of a school board election.

Hinsdale High School District Board members have come under fire from some candidates for the two-year agreement they approved Jan. 28 with the Hinsdale High School Teachers Association. Some of it is warranted — but some of it isn’t.

Critics have noted the process took too long and said some sort of temporary agreement should have been put in place so teachers did not have to work without a contract. We disagree.

The association and board began working on the previous contract almost a year before it expired in June 2020. COVID-19 created an understandable interruption. As long as both sides were comfortable continuing with the process — and we haven’t heard otherwise — we see no problem with the delay.

Nor do we find fault with the length of the contract, given the state has had financial issues since before COVID-19. Crafting a two-year deal seems a prudent move.

There is one area in which we do agree with critics. The provision that provides 6-percent salary increases each of the last four years for teachers who declare their intent to retire is highly problematic.

We understand the district’s negotiating team considered the trade-off (the district will no longer reimburse retired teachers for their health insurance premiums) a worthwhile one. The provision will save money in the long term and give the district a better handle on retirement costs.


But this move is bad news for Illinois taxpayers — including Hinsdaleans — on the whole. At the end of fiscal year 2020, the state’s Teacher Retirement System carried unfunded pension liabilities of almost $81 billion.

Promising teachers larger retirement checks (benefits are calculated by averaging an employee’s highest four consecutive years of salary in the final 10 years of work) will only make that unfunded liability grow.

Recognizing the danger of what critics often refer to as “pension spiking,” state lawmakers capped end-of-career salary increases to 6 percent in 2005 and 3 percent in 2019.

Then lawmakers approved — and Gov. JB Pritzker signed — a 2019 budget that reverted to 6 percent caps per year for four years.

The new provision means a teacher with an average salary of $73,000 will earn about $380,035 more during the course of retirement when compared with 2 percent annual raises, according to an Illinois Policy article.

The state already is spending more than $5 billion a year, or about 12 percent of its $42.6 billion budget, on TRS.

We value teachers and believe they should be rewarded for their work. But their retirement benefits have gotten out of line.

The average annual pension for a retired Illinois teacher in fiscal year 2019 was $58,860 — more than three times than average annual Social Security benefits of $17,532.

Sure, it would be great if District 86 tried to set an example and maintain a 3-percent limit on salary increases. But state officials have made that position virtually untenable by giving unions the 6-percent cap leverage.


Top Driver

What’s the answer? Legislators need to right this sinking ship by returning to a 3-percent cap. And they need to do it before too many more new contracts are signed.

 
 

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