July 5, 2019
Chicago Tribune
Pritzker, teacher’s pet, allows more pricey pension spiking
For many years some school boards in Illinois, especially in suburban Chicago, routinely handed out the “two 20s.” What was that? As public school teachers and administrators neared retirement age, they received two back-to-back 20% pay hikes as a way to boost their pensions.
Not all districts were as generous. But the practice of eye-popping end-of-career pay hikes became the norm. Because pensions are based on an educator’s four highest years of pay, school boards would reward their retiring teachers and administrators on the way out the door, passing those now-higher pension costs onto the state.
The pension spiking practice grew so offensive that by 2005, lawmakers in Springfield set a 6% per-year cap, four years maximum, on end-of-year pay increases. That meant teachers could still receive a roughly 24% bump with no penalty. Anything above that would trigger fines to the local school district. In other words, if school boards wanted to unfurl golden parachutes for their retirees, their taxpayers would have to pay for them.
Then school boards started wiggling out from the penalties too. They began offering teachers and administrators post-retirement “bonuses” to get around the caps. They got lawyers involved to protest the fines. They found loopholes in the law.
By 2018 that practice became so widespread that lawmakers in Springfield reduced the caps to 3% per year, for four years. Pay bumps could hit a maximum 12% salary spike, but above that would trigger penalties. Finally, some breathing room for taxpayers on outrageous retirement promises.
Well, the extra lung capacity didn’t last. The budget lawmakers approved and Gov. J.B. Pritzker signed on June 5 reverted to 6% caps per year, for four years. What a haughty snub at taxpayers who have to foot the bill for this last-minute generosity.
Best to be on guard. It’ll be up to local residents to keep an eye on their local school boards. A fiscally responsible board would not sign off on lavish end-of-career perks or exorbitant contracts with superintendents. But school boards don’t always act as taxpayer watchdogs.
Interestingly, ending pension spiking at one point drew bipartisan support. Even Democrats and their leaders - Senate President John Cullerton and House Speaker Michael Madigan - acknowledged the abuses and suggested local schools pick up all pension costs for their employees. That surely would get the attention of taxpayers. That was then. This is now, with a Democratic governor who won’t say no to teachers unions.
Those teachers unions applauded Pritzker’s budget that raised the cap from 3% to 6%. The trade-off, of course, is increased strain on the teachers’ pension fund, which is heavily subsidized by taxpayers statewide. The Teachers Retirement System, which funds the pensions of teachers outside Chicago, as of last summer carried unfunded pension liabilities of more than $75 billion. The system’s own website currently warns visitors that TRS “has less than 40 cents in the bank for every dollar owed to members.”
But sure, let’s hand out raises at retirement time to teachers and administrators. It’s Someone Else’s Money. Why not be generous?
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June 10, 2019
The (Champaign) News-Gazette
Board quotas removed from measure
Proposed legislation that would have established racial and gender quotas on the boards of private corporations stirred up considerable opposition during the recent session of the Illinois General Assembly.
That’s probably why Democratic legislators toned down the legislation - or as the critics charged - “gutted” it by implementing reporting requirements but doing away with mandated race and sex quotas.
In the end, the legislation - HB 3394 - does nothing more than what most, if not all, private sector corporations already do - publicly identify those who serve on their boards.
Indeed, publicly traded corporations publish annual reports to shareholders that include a wide variety of information about their board members and describe in detail what credentials they bring to their board positions.
Although legally dubious, the original bill required private businesses to appoint a woman and a black person to their boards. That mandate was subsequently expanded to include a Hispanic.
Going from the initial two-person mandate to three raised a problem associated with the identity politics driving this mandate. Who is installed by law, and who is not?
What about Asians or Indians or other representatives of the ethnic polyglot that makes up this country?
Proponents of the original legislation insisted the measure is necessary because, in the words of one advocate, corporate boards should “reflect the population of our state.”
It’s one thing to make that kind of argument about a public or legislative body, where all voices need to be heard so all concerns can be addressed.
But why would that argument apply to a steel company, a telecommunications firm or airplane manufacturer?
Those and many more are private businesses devoted to making and marketing products to the entire world.
Companies require board members who bring multiple skills and contacts and, as a consequence, draw from a broad base.
Further, they operate in competitive markets where rivals are constantly trying to outperform them.
Just where in that mix does identity politics fit? Private companies don’t get special or extra credit in the marketplace because the demographics of their boards of directors win the approval of diversity mongers.
That’s not to say, of course, that corporations are not obsessed with color. But the color that obsesses them is green - in other words, money.
They’ll do what is in their best interests, and that means looking for board members - whatever their backgrounds - if they bring the right credentials to the table.
Illinois’ corporations don’t need the same legislators who made a mess of Illinois’ finances telling them who should run their enterprises and how they should run them.Pritzker, teacher’s pet, allows more pricey pension spiking
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June , 2019
(Arlington Heights) Daily Herald
A backslide on curtailing public pension costs
Fourteen years ago, lawmakers saw a problem: Union contracts across the state specified big automatic pay raises for schoolteachers and administrators in the last years before retirement.
The pay raises resulted in higher pensions for life for the retiree and higher costs in perpetuity for publicly funded pension systems.
If end-of-career raises went over 6%, lawmakers decided in 2005, school districts would have to pay a penalty to the Teachers’ Retirement System to cover additional pension costs triggered by the pay hikes. It seemed reasonable, since 6% was — and still is — well above the rate of inflation.
But guess what? School districts continued to pay the 6% raises plus millions of dollars in penalties to TRS, which also came out of taxpayers’ pockets. More than a decade later, some suburban school districts still had contracts guaranteeing the end-of-career raises. So last year, lawmakers dropped the limit to 3%.
Now comes the budget signed into law Wednesday by Gov. J.B. Pritzker. There, on pages 349 to 352 of the Budget Implementation Act, is wording doubling the pension-spiking pay limit back to 6%, despite the growing disconnect between those who get public pensions and those who have to pay for them.
Pritzker, in a visit to the Daily Herald on Thursday, pointed out that the agreement reached last week in the legislature is “a highly negotiated budget” but also defended the switch back to 6 percent. Teachers unions like the Illinois Education Association, he explained, claimed the lower threshold prevented deserving teachers from getting bigger pay increases at any point in their careers because if those teachers suddenly decided to retire, their employers would have to pay TRS penalties.
We think that argument is disingenuous.
The truth is there never would have been a legislatively imposed limit if only certain teachers identified for their excellent work got higher pay raises that happened to trigger larger pensions.
Instead, the end-of-career pension spiking happened across the board. The 6% ceiling became a floor. Teachers unions and school boards negotiated contracts that codified it. Public pension costs skyrocketed.
Perhaps the shot at a big pension booster at retirement really does attract some newly minted young teachers to Illinois schools, as the IEA claimed in its heavy lobbying campaign. The union also won minimum teachers’ pay of $40,000 by 2025, and we have no argument with that.
But to school boards in the suburbs, where six-figure teacher and administrator salaries aren’t unusual, we point out that lawmakers are letting you give end-of-career 6% raises once again. They aren’t making you. We urge you not to backslide just because the legislature did.
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