For school officials in Oak Park, the thought of having to cover the bulk of their employees’ retirement benefits — a move that could come sooner than later if Gov. Pat Quinn’s proposal to shift more of the responsibility of funding pensions from the state to local school districts takes shape — is causing considerable concern.
In fact, those officials think local school districts need that extra financial burden like a fish needs an anchor.
Announced last month by Quinn, the plan’s provisions include a 3 percent increase in employee contributions, and an increase in the retirement age to 67 years, which would be phased in over time. The governor maintains his plan would fund pension systems 100 percent by 2042. State colleges and universities also fall under the proposed plan.
“Unsustainable pension costs are squeezing core programs in education, public safety and human services, in addition to limiting our ability to pay our bills,” said Quinn last month while unveiling his “Stabilize the Public Pension System” plan.
But schools officials in Oak Park and around the state argue that the plan, though only preliminary right now, would greatly destabilize their schools, forcing them to cut teachers and programs. It would also, they argue, force them to raise property taxes on residents more often than either would like.
Quinn acknowledges that the current pension system has been under-funded for some time, resulting in a deficit of roughly $83 billion.
School officials who question or outright oppose the plan say they didn’t cause the problem.
“That’s the question: How did we get into this situation to begin with?” said Peter Barber, president of the District 97 Board of Education. “Where did the money go? I’m not going to begin to try and explain our state pension system because I’m not an expert on it, but the problem clearly has been the state not adequately putting money into the system. It certainly wasn’t any kind of problem from the pension end of it. That’s what needs to be resolved.”
D97 successfully passed a tax hike referendum last year, but prior to that had faced a decade-long structural deficit. Over that time, the district cut programs and teachers, as well as seeking financial help from other River Forest and Oak Park taxing bodies. Barber insists that shifting the pension-funding burden to school districts is not the right move, especially for those already struggling financially. D97 Supt. Albert Roberts agrees.
Though unavailable for an interview last week, Roberts emailed his comments, saying, “It is clear that the current pension system needs to be fixed if it is going to effectively meet the needs of public employees, and also align with the efforts by our legislators to improve Illinois’ economy. However, shifting the responsibility of managing this system to the schools is not the solution, especially in a state with a historically poor track record for funding education.”
Concerning what kind of financial hit the district could take, Roberts added, “While we anticipate that such a move would likely affect our short- and long-term financial projections, it is difficult to accurately measure its true impact without doing a thorough assessment and cost analysis. With that said, we believe the only thing that shifting the responsibility of managing pensions from the state to the schools will accomplish is to force districts to invest time and money into maintaining an ineffective system.”
But what about school districts with solid finances?
Oak Park and River Forest High School, though currently sitting on about $80 million of reserves in its Education Fund, is also worried.
Supt. Steven Isoye expressed concern that OPRF might be forced to go for a referendum earlier than the 2018 timeframe. The high school, he adds, is also none too keen on spending much or all its reserves on this one issue. There are also still too many unanswered questions in the governor’s plan, Isoye said, such as what financial help the state will offer to offset the cost of funding pensions.
Those who support Quinn’s plan, however, argue that if school districts shared the full burden of their employees’ retirement costs, that would force them to reign in their overly generous teacher’s contracts.
Oak Park state Rep. LaShawn Ford (8th) acknowledges that point though he hasn’t yet stated publicly if he backs Quinn’s plan. Ford said he hasn’t heard much from constituents in Oak Park and other communities about the plan, but he wants to before making a decision. When this was mentioned to Barber, the board president said he would welcome Ford to the D97 board table to hear concerns and discuss the issue.
Ford said having school districts cover more of the cost of pensions was worth exploring, but acknowledged that school districts would take a financial hit. One way to offset that cost, he stressed, is to increase state revenues, namely having corporations and the very rich start paying their fair share in taxes. He also supports moving to a graduated income tax system for the state.
While cool to Quinn’s plan, Oak Park school officials are not cool to reforming the current state pension system.
“All of us as taxpayers will end up paying for it in some fashion,” Isoye said.
