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Teacher pensions will soon exceed education funding

In a previous post, the Illinois Teacher’s Retirement System (TRS) was shown to be a lucrative pension compared to private pensions. A new report shows that Illinois spending on this pension for downstate and surburan schools will soon exceed state aid for those schools.

Excerpt:

Escalating teacher retirement expenditures are siphoning away state money before it makes its way to Illinois classrooms. Without pension reform, teacher retirement spending will dominate the share of dollars available for state education funding, and dramatically reduce how much money is allocated to children’s learning. As schools are squeezed for funding, this could lead to cutting programs, increased class sizes or teacher layoffs.

And,

Retirement spending for suburban and downstate teachers has gradually increased over the years, and pension crowd out isn’t a new phenomenon. Many applaud increases to state education funding. However, over the past five years, 71 cents out of every new dollar set aside by state government for PK-12 education instead went to cover the rising costs of teacher retirement. The crowding out effect will only get worse as state contributions to TRS quickly begin to ramp up.

It isn’t just the payments of the retirement funds, it is also the state’s underfunding of the TRS and the resulting bond payments for the borrowing that is needed to fund the program.

The report also shows that by the time a student that is born in 2011 graduates from high school, the state will be spending more on retirement funding than aid to PK-12 schools, even though the funding is increasing from the state taxpayers!

The state retirement systems need to be reformed with employees contributing more, but the real solution is to move public employees to the defined contribution plans just like private employees who are paying the bill.

As taxpayers watch more and more of their money being taxed away, they will really be upset when less and less of that money will be going to their children’s schools and more going to the TRS pension, which will ultimately reduce the educational services provided “for the kids.”

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7 Comments

  1. Ted, don’t worry. It isn’t as though Illinois doesn’t have lots of spare cash on hand, since they jacked up our income taxes by 67%. (sarcasm off)

    • Ted Biondo

      Almost the entire 67% tax increase went to either to pension funding or the borrowing for the pension funding

  2. Problem is the people making the laws have similar golden parachutes. I think I read the Illinois pension system has been “streamlined” over 600 times in recent years. It took a lot of “thinking” to get where we are today. Apparently, there is a disconnect with the other 95% in Illinois paying for it.

  3. leatherneck

    I’ve always had a problem with the rhetoric that more education funding is “For the Kids” when the TRUTH is that this money isn’t getting to the classroom at all- It’s not buying computers, books or smartboards, its not even going to pay the salary of young & hardworking teachers who live paycheck to paycheck. It’s going into the pockets of some retiree who owns 2 homes, or else paying for their medical expenses. The unions and the media and policymakers need to be more honest and specific as far as where this money is truly going. They should be banned from saying that it benefits kids.

    However, Ted’s article needs to come out more strongly in favor of getting Illinois teachers back on Social Security the way that 48 other states are. I don’t see that argument being made strongly enough. As far as the “defined benefit” plan (401K style). They are a joke. Most people are lucky to have in their annuity what they paid into it. With the economy the way it is: tell me, what would you rather have, a pension or a 401 K which, when its gone, its gone? Those “defined contribution” plans are only good when the economy grows 10% a year..That will happen the day Hell freezes over.

  4. Or, worse yet, those dollars are going into the pockets of some teacher’s union fatcat or slimy Leftist politician.

  5. Crickets on the left, Ted. The truth hurts I guess.

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