Editorial | Teachers spike pension ball

Editorial | Teachers spike pension ball

Our legislators continue to fiddle while Rome burns.

With Illinois' public-pension systems buckling under the weight of many, many billions of dollars in debt, one would think the last thing our legislators would do is add to that monumental problem.

One would be wrong.

In another spectacular display of bad judgment, members of the House and Senate have opened the way to more pension "spiking" by local school boards that will add to the terrible underfunding woes faced by the Teachers Retirement System.

This subject is pretty much inside baseball that most taxpayers are not aware of — they have no need to know the ins and outs of teacher-pension rules.

Here, in a nutshell, is the issue.

Last year, the Legislature wisely reduced the 6 percent cap on final-year salary increases for retiring teachers to 3 percent. They took the action to stop local school boards from "spiking" teachers' pay — excessively boosting salaries to jack up pension benefits — in their final years to encourage them to retire.

The incentive for the school districts is that they could dump the extra pension costs on the retirement system — meaning all the state's taxpayers — rather than bearing it themselves.

Last week, legislators reversed their decision to cap the spikes at 3 percent, lifting it back to 6 percent.

So once again, the public sees how legislators — untethered to financial reality — are thinking only of how the next election can be influenced by a politically potent teachers' union.

Doesn't anybody in Springfield care that the state's five public-pension plans are hugely underfunded? The total is $136 billion by the state's estimate. It's around $230 billion according to the metrics employed by managers of private-sector pension plans.

Either number is a nightmare. So why is the Legislature adding to what already appears to be an insurmountable problem?

The teacher-salary spiking problem is an outgrowth of the early-retirement orgy of the early 2000s. That's when governmental entities, including local school districts, offered veteran employees financial incentives to retire so they could replace them with younger workers who earned less.

Teachers' pensions are based on their final four years of salary. So some school districts — too many — offered four consecutive years of 20 percent salary hikes to goose the pensions teachers would receive. The extra pension costs were picked up by taxpayers, not the school districts.

That practice became so outrageous that the Legislature finally placed a 6 percent lid on the spiking. Teachers' unions then convinced many districts that the lid was actually a floor, meaning retiring teachers must receive 6 percent hikes.

Last year, owing to the abuses, legislators lowered the figure to 3 percent. That didn't require local school districts to limit teacher pay to 3 percent in their final years, but it did require those districts that gave raises in excess of 3 percent to pick up the extra costs themselves.

With some school districts reluctant to pay for hikes over the 3 percent limit, teachers went to Springfield to flex their political muscle.

As a consequence, a provision restoring the 6 percent spike was slipped into the state budget last weekend. This kind of irresponsible behavior — by both teachers and legislators — can't go on forever.

A day of reckoning is on the horizon.

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