District 90 board member proposes solution to absorb pension costs

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By Devin Rose

Staff Reporter

If a proposal floating around Springfield to shift pension costs from the state to local school districts becomes a reality, River Forest's District 90 is in good shape for now, according to a member of the school board.

But legislatures in the capital have assumed that pension benefits, rather than the repayment schedule of debt racked up over decades, is the problem.

The pension shift proposal has more than a 50 percent likelihood of passing this spring, said River Forester Ralph Martire, who also serves as executive director of the Center for Tax and Budget Accountability, a Chicago-based bipartisan fiscal policy think tank. Martire estimated it could take effect as soon as September, depending on the legislation, and the D90 board and staff have factored the potential cost into the district's future projections.

"District 90 has taken every step it needs to ensure it has the fiscal capacity to handle whatever Springfield decides ultimately to do on this issue," Martire said, adding it will not take away the district's ability to fund education.

Last month, D90 voted unanimously not to take its allowed three percent tax levy increase and approved a 2012 levy that is about 2.9 percent less than the previous year. The decision was made based on a $23.5 million fund balance in the 2017 fiscal year, the final year of its five-year projection.

Martire, who has been with the CTBA since it was formed in 2000, said his work with that organization gives him the skillset to evaluate information and issues that come up for the school board. But he said it doesn't dictate how he discharges his responsibilities. His service on the school board is a very different responsibility. In that capacity, Martire said he makes decisions in the best interests of the children's education and of the taxpayers, who are the ultimate investors.

In an article last week in Crain's Chicago Business, Martire explained factors leading to the $95 billion in debt that is owed to the state's five pension systems.

He said for more than 40 years, the state borrowed against its pension system instead of fully funding it, and used the money to pay for services like education, public safety and healthcare. Taxpayers consumed those services for decades without having to pay full price in taxes. Martire said the pension system subsidizing the services made the services cheaper in the short term, but now the state needs to pay back what it borrowed. A 1994 law implementing aggressive borrowing against pension contributions grew the unfunded liability by 350 percent from 1995 to 2010 and created a back-loaded repayment schedule.

Legislators have assumed that overly generous pension benefits are the driver of the problem, Martire said, but the solution of benefit cuts "misses the bulls-eye of the target."

Martire said the state constitution makes it clear that benefits can't be taken away from current workers or retirees, but transferring pension costs to districts is "eminently unfair." That would mean diverting local revenue for salaries, programs and supplies to pension costs that the state should be funding.

Instead, the repayment schedule of the debt needs to be restructured. Martire said a flat, annual payment structure would create an obligation that decreases in real terms over time. He added that solution actually deals with the cause of the problem.

Reader Comments

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Done from Oak Park  

Posted: January 24th, 2013 1:15 PM

"...for more than 40 years, the state borrowed against its pension system instead of fully funding it, and used the money to pay for services like education, public safety and healthcare." Wrong. By not fully funding what was already given to the state by the taxpayers for pensions, our "leadership" in Springfield used the money to pay for projects that were more "voter-friendly" than pensions. We have all already paid for this once - it is criminal to ask us to pay again.

RF JO   

Posted: January 24th, 2013 1:03 PM

Kudos to District 90. Sad that both candidates for Village President appear firmly entrenched in the raise taxes and forget about the future camp. Both supported Home Rule regardless of what they now claim. Gibbs will do whatever he is told to do. Adducci was a lobbyist and her and her husband/lobbyist, Al Ronan, are products of the Illinois political crowd that produced pension problems that are worst in the nation. Let D90 run things. The alternative is ever-increasing property taxes.

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