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Illinois Teacher Retirement System – Who actually pays the 9.4% retirement?

There are two schedules in the Rockford Education Association’s online collective bargaining agreement at rps205.com. Appendix A is entitled “Salary Schedule” and consists of 8 lanes and 20 steps representing the salary at various educational levels attained and years of service.

Appendix B is entitled Computation Schedule for Illinois Teacher Retirement Syetem Purposes and includes salary (A) from the Salary Schedule and the ITRS contribution (C), which is (A) multiplied by 9.4%. The teachers are paid the salary (A); the (C) contribution is sent directly to the state teacher’s retirement system by the district.

No income taxes are paid on the TRS (C) contribution. The TRS contribution is never given to the teachers to contribute to the state plan; it is paid directly to the state by the district. Some teachers say this contribution is part of their salary, and therefore, the teachers pay for their retirement not the district.

Let’s look at the contract and the law – you make up your own mind who is paying the 9.4% retirement. I know it’s the taxpayers, but lets go through the exercise, anyway.

First, look at your paycheck. Social Security and Medicare contributions (C) are taken out of your check as a percentage of your gross salary (A). The company pays half and you pay the other half of the contribution (C). In the school district, the state pays half and the district pays half. There is no contribution made directly from any check received by the teaching staff.

In Article 30 of the REA contract – Compensation – Section K:

The Board shall pick up and pay 9.4%, of the staff member’s Illinois Teacher Retirement System (“ITRS”) contribution in a non-taxable manner pursuant to Section 414 (h) of the Internal Revenue Code of 1986, as amended. 

Effective beginning the 2007-2008 school year, staff members shall not be required to pay and shall be held harmless by the Board from any obligation to pay the .84% TRS health care contribution required to be paid pursuant to 5-ILCS-375/6.6.

This, in and of itself isn’t necessarily proof, even though state law is referred to, in the text of the contract, stating that the board would hold staff members harmless, meaning they should be paying it, not the district – I know this statement was negotiated into the contract.

Let’s look at the state law for further clarification. The definition of “salary” under state law: (40 ILCS 5/16-121)

The actual compensation received by a teacher during any school year and recognized by the system in accordance with rules of the board.

The school code doesn’t say anything about TRS contributions made by the district being a teacher’s salary.

Also, 40 ILCS 5/16-152,

The employee contribution required under this section of 1998 is the responsibility of the teacher and not the teacher’s employer, unless the employer agrees, through collective bargaining or otherwise, to make the contribution on behalf of the teacher.

This section along with 40 ILCS 5/16-158 covers the entire 9.4% of the TRS contribution. This phrase is used in at least three sections of the state code including 5 ILCS 375/6.6 Contributions to the teacher Health Insurance Fund, 40 ILCS 5/16-129.1 and 40 ILCS 5/16-158.

And finally, and most clearly stated is 40 ILCS 5/16-152.1 – Pickup of Contributions: in this section,

If an employer decides not to pick up the member’s contribution, the amount that would have been picked up shall continue to be deducted from salary. If contributions are picked up, they shall be treated as employer contributions in determining tax treatment under the United States Internal Revenue Code.

This 9.4% is being paid by the district due to the collective bargaining process, and is not salary. The contributions (C) could be renegotiated to be paid through payroll deductions from the actual salary (A) of the teachers through the collective bargaining process.

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46 Comments

  1. Nice work Ted…you get an A+

  2. Businessman

    In the private sector, I receive a salary, and from that salary I DEDUCT-by writing a check from my account-an amount that I send to my IRA. I can choose a deductible IRA (and pay no taxes on this amount) or a non-deductible IRA and pay the taxes. Either way, I receive the money in my paycheck, and then send it back to my retirement plan.
    From the article, the teacher plan does not seem to work this way.
    Thanks Ted.

  3. CrazyJoeDevola

    The big babies will strike if we ask them to be like the rest of the community that funds their salary. How can we ever get Illinois to pass legislation to make it illegal for teachers to strike? Most of the other states have already done it.

  4. Jim Yeager

    “I know this statement was negotiated into the contract.”

    How do you know that, Ted? Were you part of the negotiations? Were you told this by someone who was part of the negotiations?

    In either case, I’m curious how you find it ethical to state it here, considering negotiations are supposed to be in private.

    I know that you like to see every problem in education as the fault of the teachers’ unions, but it’s hard to still get up on that moral high horse when you’re violating confidentiality agreements.

  5. Ted Biondo

    Jim – another emotional response, off topic – Do any of you stick with the topic of the post – no, never! What about state law and the contract proving that the REA doesn’t pay the TRS, just like I said?

    What kind of comment do you have on topic? Nothing! No, you and the others go off on a tangent because you have no argument against the facts, do you?

    I’ve been attacked by a few people because of semantics. I prove the REA union doesn’t actually pay for their retirement like the rest of us, and you bring up some garbage about the secrecy of negotiations. Pretty lame.

    I’ve told you that these cut recommendations need to have the REA concessions and it is too important for the kid’s education to let the union climb into a secret place to deal with the administration and the board – not going to happen regardless of your trying to confuse the issue.

  6. Ted Biondo

    Crazy Joe – How many other states have raised their taxes in a recession? Some of the surrounding state are actually lowering their taxes.

    Many of us, when we have had enough of paying for other people’s bills, will one day leave and let this boiling pot of inefficiencies, boil over on itself!

  7. Denny Wallace

    Strikes are fine but we must create a level playing field… Right now the Teacher Union knows they can call a strike because they never put at risk any wages or benefits because the full Teacher Year is always made up so they get a full paycheck.

    All Rockford needs to do is create a credible bluff that we will open schools with or without Teachers in the Fall. i.e. Insure that Teachers have skin in the game if they go out on strike and they lose $200 to $500 dollars per day they strike.

    All we need is to get about 2,000 people with 4 years degrees to sign up to be Substitute Teachers then let the Games begin if the Teachers Call a strike…

    Yet the School Board needs to encourage such a “bluff” by starting a campaign NOW to pay for the $50 Sub certification and actively asking for people to Support the Kids by signing up to Substitute Teach if the Teachers go out on strike…

  8. Denny Wallace

    Crazy Joe… If you don’t allow Strikes then you have to agree to binding Arbitration and then you have zero control of the outcome…. At least with the Strikes… You can in fact Open Schools and force the Teacher Union to Negotiate or lose pay\benefits…. Something Teachers aren’t accustom to…

  9. I think most people would agree that the TRS contribution is paid by the district, on behalf of the employee, is part of the employee’s salary/benefit package.

    As such, it is inaccurate, as some claim, that teachers do not contribute towards their pension for retirement.

    They do and it is paid by the district. Perhaps in the next contract the district can pay the employee and they can write a check.

  10. Ted,

    Speaking of Pat Quinnochio raising our taxes, you need to hear the radio ads by Chris Christie trying to lure Illinois businesses to New Jersey.

  11. Ted

    Since you would not let me post on the other thread, due to your unfair censorship, let me comment here.

    I never attacked you personally or called you a Nazi. I simply compared your threats of censorship to the historical behavior of facists.

    In a previous thread, you called Nancy Pelosi and other Democratic leaders some pretty horrible things. When I criticized you for it, you responded that it is ok because you were not calling them names, but describing you behavior.

    I hope that clears that up. I don’t plan on going away. I am used to being places I am not wanted. I never broke pool rules, simply violated your politics and agenda.

  12. Jim Yeager

    Ruh-roh. Ted’s a little sensitive on the subject, isn’t he? Talk about an emotional response.

    Remind us all again, Ted, why you’re not on the RSD205 school board anymore?

    Before you get too sensitive, remember: you signed up for this job. If you can’t handle people questioning you, then you’re even more unqualified to do this than you are unqualified to make decisions that influence educational institutions.

  13. Ted Biondo

    Jim – I will not be called a Nazi. This blog is going to maintain some decorum and discuss the facts. You haven’t said anything about the school code stating that the district pays the retirement because of negotiations. It is not part of the salary. The post is not about me. It’s about issues, ideas and facts. You guys can’t stay on task.

  14. Ted Biondo

    Denny Wallace – your comment to Crazy Joe #8 is right on target. Allowing the strike gives you some control. Arbitration turns the whole process over to attorneys and the courts – the elected officials are out of the picture.

  15. No one called you a Nazi so you need to stay on task. Please don’t get emotional, let’s stick to facts.

    You call for decorum but ignore your breaches of etiquette. Or are you denying what you said about Democratic leaders? Or is it a different set of rules.

    Keeping on point, any response to my comment 9 would be interesting.

  16. Jim Yeager

    Ted: I’m glad to know you won’t be called a Nazi. I have no clue what that has to do with anything that I’ve written, but it’s still nice to know.

    What you don’t appear to have noticed is that the pension payments were not simply decreed by the teachers’ union. As you keep noting, the issue was settled in negotiations. That means the arrangement was seen as acceptable by administration and, ultimately, seen as acceptable by the school board.

    That’s why a discussion of your time on the school board is relevant, Ted. Were you in those negotiations or not? Did you vote on that contract? It’s one thing to be an outsider who cries foul at how things were put together, but it’s something quite different when you’re an individual who took part in the process.

    Like it or not, Ted, when you write about the Rockford public schools, your history with that organization is relevant.

    You guys can’t stay consistent.

  17. Ted Biondo

    Jim – since we all agree now that the TRS payments are made by the district for the teachers and that result is due to contract negotiations, the district could give the money to the teachers and let them write the checks, but the budget is being reduced not increased or staying at the satus quo. The district needs $11.6M in union concessions.

    So these negotiations need to request that the REA give back by payingsome of the 9.4% by paying for some percentage of theTRS from their A salary to save more teacher jobs and more programs which would result in the second set of recommendations.

  18. Jim Yeager

    Ted: As you were so quick to point out (in a much more emotional response than was warranted), I never argued the point. We don’t “now” agree on that point. We always did. What we disagree on are the implications of such data.

    While you are trying to paint a picture of the teachers being the oppressive bad guys who somehow weaseled or strong-armed the school district, the reality is that the school board (which you were once a part of) agreed with the terms. You just can’t deny reality, Ted.

    Now, essentially, you’re arguing for a reduction in teacher take home pay. (By the by, you would have been better off making that argument in the post instead of using the space just to try and assert your “expertise.”) If you want teachers to take a reduction in take home pay, then what’s the offset?

    For that matter, if teachers need to “be like the rest of the community” (as another commenter wrote) why don’t administrators? Are they making concessions? How much of a reduction in take home pay are they going to take?

    If the goal of public education is student learning, then tell me something, Ted: how does reducing teacher pay improve student learning?

  19. Denny Wallace

    Hey Jim I proposed elsewhere horse trading Teachers working one additional class period, being paid more to do so yet net out zero gain or loss because the they will then be asked to pay their own Pension contribution….

    School District saves the money they need from Union concessions + another $15-$18 million in savings due to 292 Teachers no longer being needed.

    More to it then just what I laid out but would this fly in your eye’s if you were making the call?

  20. Denny Wallace

    Oh yea…. Teachers would gain because their Pension would be increased by the 9+% they are paid to offset their paying their own pension…

    This is a big bargaining chip for teachers to give up but it’s but one possibility of how you trade big cost saving in work rule changes to avoif taking a cut in take home pay….

    Yea alot of Teachers face getting laid off…. But Welcome to the real World the rest of us live in who don’t have guaranteed Jobs for Life!

  21. Can someone please tell me why the teachers need a union in the first place? Why do these well-educated individuals need to be represented as a group and not stand on their own merits?

  22. Ted Biondo

    Terry – I don’t know. I worked as a professional engineer for 42 years without being in one union. I moved twice and was layed off once for one month. We were evaluated every year; our salary was determined by the one evaluating us and I retired at 62 years old, but with no cost of living in my UTC pension. Maybe that’s the difference.

  23. Ted – pretty much same here. I’ve been in private industry for almost 29 years and everday could be my last and I would have no union steward to go cry to. My current company is converting its defined benefit pension to a 401K.

    The advantage for teachers and students if teachers had 401Ks would be when the teacher gets burnt out before retirement age, they can leave the profession with their retirement package and not just go thru the motions until retirement.

  24. kevind1986

    In this professional’s opinion – if you feel you need to be unionized or WANT to be in a union – you shouldn’t be considered a professional. I know that is harsh – but professionals can speak for and negotiate for themselves. They don’t need to pay someone to do it for them. Ted – without going into specifics – I’m right there with you.

  25. Denny Wallace

    The Teacher Union got their hooks into the Public School Golden Goose back when Teachers were probably underpaid, under-appreciated (as remains today) but overtime, they hid behind BUT IT’S ABOUT THE KIDS YOU KNOW… and surprise, surprise as that great Philospher was fond of saying… We got our FUBAR called Public School Education where we spend $600,000,000,000 per year and get so little in return…. Yes that’s $600 BILLION.

    So how much in Union Dues do you think you collect from the 4-5 million public School Teachers in the USA?

    Assuming at least 500 per teacher…. = $2 to $2.5 BILLION in union dues. Does that describe PAY TO PLAY POLITICS?

  26. lucy ricardo

    Kevin

    Funny that even professional actors have a union. You would think multi-millionaires who are famous wouldn’t need any union protections, but obviously they feel differently. What about police, or firemen? Not professionals? Hope you never need them, or you may change your tune afterwards.

    I know you would never consider teachers professionals from you comments, union or no, but do you really think most teachers care if you want to call them professionals or not? I highly doubt it.

  27. Blue State Blues

    Ted,

    Do all public school districts in our area pick up the entire 9.4% as 205 does? I’m not sure, but I don’t think they all do. Some may not pick up any. Have you done any research in this area?

  28. Ted Biondo

    Blue State Blues – I have heard that other districts pick up some and others pick up none in the general area. I have looked at the contracts for the Rockford and Harlem Districts and they both pickup all the TRS payment. I guess I would have to look up other contracts if I could find them and look at the compensation section to know which districts pay some and which districts pay none.

  29. Lucy/Ricky,

    You never do explain why teachers need a union? While you are at, tell us why actors, firemen, and policemen need unions.

  30. kevind1986

    Lucy – you obviously haven’t a clue what “professional” means. Contrary to your obvious opinion, itg doesn’t mean “I want to call myself a professional.” No – actors aren’t professionals for goodness sake – they are actors.
    And you must have a brain dysfunction – I made the point that teachers – as professionals – don’t belong in a union.
    If firemen and policemen are professionals, they don’t belong in a union. About a dozen of my friends are firemen – most of them agree with me.
    You need to educate yourself about what professional means before you say anymore – you’re looking silly.
    Don’t you get tired of being told you don’t have a clue what you are talking about?

  31. lucy ricardo

    Kevin,

    I would hate to look silly, so please enlighten me. Are you saying that professional=not in a union?

    So police and fire are not professional? Hmm…

    What does professional mean to you? I don’t want people telling me to get a clue (or are you trying to be rude?) so please fill me in.

    Thanks!

  32. lucy ricardo

    Ted,

    Please ban Kevin from your polite, fact based blog, for claiming I have a brain dysfunction.

    I won’t have someone tell me I have a brain dysfunction!

    This blog needs standards!

    (Just kidding, but I wanted you to see how ridiculous that argument really was!)

  33. Big Bopper

    If you require the teachers to pay the 9.4% out of their own pocket to the pension, or lets be conservative and say 5% of it….Do you anticipate giving them a 5% raise on the base to “offset” the cost? I doubt it.
    TEachers are taxpayers too. Sometimes people lose sight of this. So if they are now required to pay 5% of their pension, do you foresee that they will get a property tax abatement of 5% to offset it? I doubt that. Will their mortgage and car payment go down? Most likely not.
    So you see, theres no easy answer.

  34. Ted Biondo

    Welcome to the blog Big Bopper. No, I would expect the REA to pay something around 5.4% to be exact, the same paid by the IMRF workers at the school district and the non-union public workers pay 6.2% for Social Security.

    You are right. There would be no offset, because that’s what they should pay. Sundstrand didn’t make up my pay when my defined benefit retirement plan was changed.

    The workers at Sundstrand are working with 2- 4 week furloughs that amount to 4-5% cuts in pay. Why should the district with spending exceeding revenues by $50M be exempt from cuts, not just freezes in wages?

    All the workers at Sundstrand are taxpayers too and they weren’t exempt from cuts in pay, also taxes do not pay their salaries. All these people’s mortgage and car payments will not go down either. We are in a recession Big Bopper, and others are sacrificing, or in poverty, layed-off for more than a year.

    Why should people in the school district be exempt from the recession in the real world like the rest of us?

  35. Ted, you are a dork. Even worse than the little Irish guy.

  36. Ted Biondo

    A very intelligent comment Larry. If the facts elicit that kind of response, what can I say?

  37. kevind1986

    Ted: I have to agree with Lucy – his arguments are ridiculous.

  38. Big Bopper

    C’mon Larry, thats a cheapshot. I might not always agree either, but Ted has ALWAYS been about making an argument based on FACTS and logic. He is never outwardly “mean” to peple (like Pat Cunningham is) so don’t call him names.

  39. kevind1986

    Ted and Chuck are ALWAYS scholars and gentlemen. Sometimes I wish they would get fired up and they don’t – but I respect them for that. PC just spewed his “hits” over the last few weeks as evidence of his worthiness. I just can’t see Ted or Chuck ever resorting to such – oh, I don’t know – immaturity?

  40. Hi – I’m a teacher. You can look up teacher’s salaries online on Champion.org. The “C” amount is included in this listing. When we talk about average teacher salaries, the “C” amount is included. When I was hired, I was told that my salary was the “C” amount, but that I wouldn’t see it because it was directly sent into the pension. It is essentially a 401K in which we are REQUIRED to pay our money toward our retirement.

    If the school district would prefer to give us the “C” amount, and then have us pay it toward the state, whatever. That seems like a waste of ink, though.

    Bill

  41. Ted Biondo

    Hi Bill, Welcome to the blog. You can be told anything, Bill. They didn’t tell you the truth. The law is specific – the district pays it for you. If the district did not pay it for you, it would come out of the A schedule. It’s in the law. Reread the post above.

    Besides, some districts don’t pay it and the TRS is taken out of the A schedule because the salaries are comparable before the deduction is made. The districts place this stuff on the web pages only because they are required to by law, but the info is very hard to find.

  42. Rich H.

    It seems to me that this really comes down to semantics. The 9.4% contribution to the state retirement system is still part of a teacher’s compensation, no matter how you try to say it. Salary, retirement contributions, or any part of health insurance premiums or reimburesement for part of college costs to improve a teacher’s education paid by a school district are all part of total compensation, just like they are in the private sector. TRS requires 9.4% of salary (actually a little bit more but let’s not get too technical here) to be sent to the state. So, at some point, part of the compensation a teacher receives must be labeled salary and part of it the TRS contribution. Otherwise, a salary could never be arrived at preventing the calculation of the 9.4% part sent to TRS. You simply can not get an actual number by multiplying a percent with an unknown number. Everyone knows that. So, at some point, the number is declared (the “salary”), as it is in Appendix A. The Rockford District increases the numbers in appendix A by 9.4% to get Appendix B. There are two ways to do this. One is to say that 9.4% is paid as a benefit or that the 9.4% is added to the teacher’s salary and then deducted (and have no appendix A). Either way, it is still part of a teacher’s compensation.

    I wonder if anyone views the 9.4% TRS contribution as not being a part of a teacher’s compensation since one way or another the state demands it?

  43. Rich H.

    In reply to comments #21 & 22 about why do teachers need a union anyway?

    Well, back in the Great Depression Era, the Belleville Township High School Board let a bunch of teachers go so they could hire their family and friends since decent jobs were scarce. Students and the public revolted and marched to downtown Belleville in protest. That was the beginning of the first AFT teachers’ union in IL. It began before the Chicago IFT union.

    As a former teachers’ union campus representative and past union president, I took heat from administrators for fighting for acceptable, clean, fresh air in classrooms and chemistry labs and some other things that were necessary. Administrators did not like the fact that I would not be quiet about obvious HVAC issues that needed be corrected. Ultimately, a mold bloom event occurred where mold grew in a lot of classrooms in different buildings after about 5 years of me complaining things were not being cleaned, maintained or run correctly. I even had EPA training in DC during this period which didn’t seem to matter. After I had been elected and just before I became union president for a 2 year term, the principal was caught changing his reason (for which he could provide no example or substantiation when asked but said he had “heard things”) for having someone under him put a negative comment in my 2 year evaluation. I had witnesses in two different meetings in which this change was exposed. Basically, he got caught lying. His first reason did not hold up to scrutiny so he simply made something else up in my opinion. I should have sued, but I agreed to have a letter attached to the evaluation stating it didn’t follow the District’s teacher evaluation plan. I let the principal off the hook. I think he was being directed by higher ups.

    Around this same time, the superintendent, who is no longer with the school district, lied 3 times to the union president for which I was taking over. The superintendent stated in 3 different meetings that I personally attended that the District had not brought in lawyers to train administrators on how to evaluate teachers. The 3 meetings were spaced about a month apart and involved other matters primarily. In the 3rd meeting, after the superintendent denied it yet again, the union president leaned on the super’s desk and asked him if he was absolutely sure no lawyers were brought in to train administrators. The superintendent threw his hands up and leaned back in his chair and said yes lawyers had been brought in but the union needed to understand why. I think the union already knew.

    Groundwork was being laid that had little to do with evaluating the quality of a teacher, but rather a legal, technical basis for eliminating teachers that were deemed “troublesome”. If not being in the meetings myself and not being on the receiving end of some of this “training by lawyers” of administrators, I would not believe the conspiratorial nature myself. I still have all of the paperwork to substantiate what I claim here. So this is only one reason teachers need a union. There are other justifiable reasons teachers need unions IF THEY WANT ONE. Unions are not required in education and can be decertified by its membership. Here is a quote by Albert Einstein on why he joined a union.

    Einstein, Charter Member AFT Local 552
    “I consider it important, indeed urgently necessary, for
    intellectual workers to get together, both to protect
    their own economic status and, also, generally speaking,
    to secure their influence in the political field.”

    – Albert Einstein, 1938, in a comment explaining why he
    joined the American Federation of Teachers local number
    552 as a charter member.

  44. Ted Biondo

    Rich H. welcome to the blog. The 9.4% is not a matter of semantics – it is a matter of the state law. There is no income tax paid on the TRS it is paid directly by the district. Reread the post. The TRS is in the REA contract Section K, Also, the “LAW” states, “If an employer decides not to pick up the member’s contribution, the amount that would have been picked up shall continue to be deducted from salary. If contributions are picked up, they shall be treated as employer contributions in determining tax treatment under the United States Internal Revenue Code.”

    Other districts do not pay the 9.4% TRS and the teacher’s pay the TRS directly and their income tax on their salary – it is a fact, it’s not semantics, it is the law!

  45. Gwen Roberts

    Hey Ted,

    Funny thing, I have deductions to the tune of $350 for TRS from EACH paycheck. Just another spin on the truth to make the teacher the bad guy. Teachers take jobs for $9000 a year after four years of college expenses because the retirement plan IS part of the salary. Thank god for unions otherwise I would still be making that. Oh I forgot, I should be doing this for free right. How dare I a lowly, dullard teacher make a decent salary.

  46. Ted Biondo

    Welcome to the blog Gwen – In what school district do you teach? Rockford 205? I would sure love to see one of those checks. I stated in my post that in some districts teachers do pay the TRS, but if it isn’t part of the gross salary and unless state and federal income tax is taken out, it isn’t part of their pay. It’s a benefit fully funded by the district taxpayers.

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