By: Ted Dabrowski and John Klingner
Unexpectedly tucked away in Illinois’ $40 billion 2020 budget was another giveaway to the state’s teachers unions. School districts are once again more free to spike end-of-career teacher salaries and pass-on the resulting pension costs to state taxpayers.
The Illinois Education Association had been pressuring legislators to change the law “capping” end-of-career benefits for over a year, saying spiking was vital to preserving education. Wirepoints thoroughly debunked the claims of the IEA and their Republican sponsors.
Nevertheless, last week’s bonanza legislative session gave the IEA exactly what it wanted.
First, a bit of history.
In 2005, legislators attempted to partially rein in one of the most despised practices in Illinois: pension spiking.
Prior to the law, school districts across the state were doling out excessive end-of-career salary spikes to keep their unions happy. Districts got away with those spikes because the state, and not school districts, was responsible for paying the full cost of teacher pensions.
It wasn’t unusual to see end-of-career salary spikes of 20 percent for administrators and teachers. Those salary increases, in turn, pushed up the total pension bill across the state.
That’s why in 2005 the legislature finally stepped in and required districts to pay some of the costs of spiking. A school district could still grant high salary increases to teachers near retirement, but the school district, and not the state, would have to pay for any additional pension costs that stemmed from annual salary increases over 6 percent.
In 2018, the legislature brought even more accountability to end-of-career salary spikes. The maximum salary spiking threshold was lowered to 3 percent.
Illinois teachers unions didn’t like that. They didn’t like that the cost of their spiked salaries was made more obvious to taxpayers at the local level. The pension costs related to their spiked salaries became line items in individual school district budgets, rather than hidden in the billion-dollar contributions the state makes to pensions each year.
Which is why the unions pressured Illinois politicians to go back to the higher 6 percent threshold. Lawmakers obliged last week when they snuck in language restoring the 6 percent threshold into the 1,091 page 2020 budget implementation bill.
To see how spiking works in practice, just take a look at the automatic salary increases New Trier’s retiring high school teachers get. The below comes directly from the district’s 2016-2019 teachers contract and reflects what career teachers who commit to retiring before 2020* receive:
In all, New Trier retiring teachers will get a total, automatic bump of more than 25 percent to their salary in their final four years. And that means far more in pension benefits. How much more?
Take a New Trier teacher with a salary of $130,000 who recently committed to retiring in four years.** The 6 percent bumps will grow her salary to more than $164,000 at retirement. As a result, she’ll earn approximately $400,000 more in pension benefits over the course of her retirement when compared to a salary based on 2 percent annual raises.
Why use wealthy New Trier as an example when districts across the state do the same sort of spiking? Because it and other wealthy districts are the prime beneficiaries of Illinois’ inherently unfair pension funding scheme where the state, and not local school districts, bear the cost of pensions.
This latest change will only make that unfairness worse.
Read more about spiking and the unfairness of Illinois’ teacher pension funding system:
- Illinois’ regressive pension funding scheme: wealthiest school districts benefit most
- Teachers’ Union Cheers Bill For Illinois To Fund More Pension Spiking
- Want to Fix Illinois Teacher Shortage? End the Tier 2 Pension Rip-Off
- Administrators over kids: Seven ways Illinois’ education bureaucracy siphons money from classrooms
- Where Illinois’ skyrocketing pension promises came from
* Recently-retired career New Trier teachers retiring after 2020 will receive 5% automatic increases.
** $130,000 is the last step (step 22) for a master teacher in the 2017-2018 salary table.