Cash on account not real issue

Cash on account not real issue

Are the state's school districts really as flush as the governor claims?

Gov. Pat Quinn has stirred up a hornet's nest among public school administrators by suggesting that many districts are sitting on so much cash that it should be no problem for them to pay the state's share of teacher pension costs.

To bolster its case for shifting the burden of payments from the state, where it has been for decades, to the local schools, Quinn's office last week issued a fact sheet purporting to show how many schools days the districts could run using cash on hand.

The Quinn fact sheet indicated Champaign could run for 199 days, Urbana 103 days, Danville 182 days and Oakland 306 days. Poor Tuscola can only go for 14 days.

Apart from the discussion of whether the state should be allowed to escape its responsibility for pension payments by transferring it to local school districts, there are a couple of problems with the Quinn fact sheet.

For starters, although the school districts most certainly have money in their accounts there is no real certainty that money is available to be spent as Quinn suggests.

Exhibit A for that proposition is the many millions of dollars the Urbana schools are holding in escrow in connection with the longstanding property tax disputes involving Carle and Provena hospitals. That money may well be going back to the hospitals at some point. It's certainly not available to be spent now.

Who knows how many other examples of that nature exist on the Quinn fact sheet?

As for money held in a school district's separate transportation and operations and maintenance funds, state law requires it be used only for those specific purposes.

So clearly, there is less to the Quinn fact sheet than meets the eye.

But there's an even bigger reason the Quinn fact sheet is mostly irrelevant.

It cites funds it claims are immediately available to meet a new spending obligation. But the money held in the district's bank accounts can only be spent once. The state is talking about transferring responsibilities that would require pension spending every year that will go higher and higher.

For each 1 percent share of the state's teacher pension payments the districts would assume, it would cost Champaign $450,000, Urbana $220,000, Danville $259,000, Mahomet-Seymour $98,000. The state's share is anywhere from 7.5 percent to 8.77 percent.

In the context of those potential annual multimillion-dollar costs, the cash reserves to which Quinn refers will be inadequate to address the problem.

There is little doubt that addressing the $80 billion-plus unfunded liability in the state's public pension systems will require serious negotiating and distasteful concessions from all the appropriate parties. Quinn's fact sheet adds little that is useful to the complexities that surround this issue.

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Sid Saltfork wrote on June 28, 2012 at 12:06 pm

Who are the "appropriate parties"?  The legislature who skipped the employer pension payments?  The governors who encouraged the skipping of the payments?  The employees who made their pension payments?  The "taxpayers" who benefited from expanded programs, and pork barrel projects?  The media who whipped up the animosity toward public employees because the pension debt got too high?  Who are the "appropriate parties" that are going to make the "distasteful concessions"?