Pension debt limits teacher pay, hurts recruitment in Illinois

Money that could help address the teacher shortage is often the first to get cut in pursuit of keeping up with government pension debt. Supporting Illinois teachers will require constitutional pension reform and protecting Tier 2 cost savings.

Teachers unions claim Illinois needs to improve teacher pensions to attract more educators, but new survey data shows the opposite is true.

National research from EdWeek and the Equable Institute showed 1-in-3 board members and administrators surveyed said increased expenses as a result of pension debt have led their district to reduce non-retirement related expenses. Funds that could go toward teacher recruitment, support and compensation were the most likely to be squeezed.

This is especially concerning for Illinois, which has the lowest funding ratio for state pensions in the nation at 52%. The Teachers Retirement System is even lower, funded at 45.8%, making it the second-worst funded state teacher retirement system in the nation. Only New Jersey is worse. When all types of public pensions are considered, it is the 13th-worst funded system.

The state will eventually need $154.3 billion to pay its retired educators. It is $86.3 billion short of that amount.

The quickly growing costs associated with pensions have resulted in pension payments growing faster than other education spending during the past decade. Since 2015, the general funds spent on PreK-12 education has grown by 59%. TRS payments from the general fund grew 82% in the same time period.

In 2008, pensions accounted for about 14% of the state’s education spending, now it’s nearing 40% and will continue climbing if benefits grow.

The greater the share of the budget that’s sucked into keeping up with fast-growing retirement benefits, the more schools must stretch what is left to pay for salaries, staff and classroom needs. Because the state doesn’t pay enough of the costs, districts rely more on local property taxes.

That has driven Illinois’ property taxes to No. 1 in the U.S. It also hits low-income communities the hardest.

For the schools, it makes it harder to offer higher wages that could help recruit teachers. When tax dollars can’t keep up, school leaders respond by cutting away teacher support. In a state such as Illinois where only 1-in-3 students can read at grade level, further cuts to classroom support to prop up retirements ensures more failure.

Some lawmakers want to boost pension benefits even more, bring benefits for those hired since 2010 closer to the benefits that are already bankrupting the state. Even proposals to raise the cap on the pensionable salary would add billions in new debt. It would force the state to pay even more into pensions and leave even less for teacher pay.

The primary beneficiaries would be the administrators and superintendents already making over six figures annually, not the teachers whose support is suffering and many of whom will never see the pension benefits designed for long-term workers. Those who expect to receive a pension after a lifetime of service deserve to know their retirement funds will be there when they need them. Currently, the biggest threat to secure teacher retirements is the threat of insolvency from administrator benefits growing quicker than taxpayers can afford to pay for them.

There is a better path. Lawmakers should stop adding to the debt. That means no new benefit increases and support for a constitutional amendment that would allow for changes to future, not-yet-accrued benefits to achieve retirement security for teachers without taking away current benefits. Any money saved from pension reforms should go directly to property tax relief that will support school districts.

Illinois cannot solve its teacher shortage by increasing pension debt. The state will attract and keep good teachers by investing in classrooms, not by making bigger promises for the future that taxpayers cannot afford.