Report: Illinois teacher pension structure exacerbates gap between rich, poor schools

Aug 23, 2017
Originally published on August 23, 2017 3:04 pm

Illinois’ teacher pension system creates an unequal funding structure between rich and poor public school districts, a report released Wednesday said.

That’s because the state pays the majority of teachers’ pensions, which are tied to a teacher’s salary. The more the teacher earns, the more the state’s share of his or her pension. According to the nonpartisan Bellwether Education Partners report, when pay and benefits are factored in, the gap between per-student funding in rich and poor schools widens.

The average teacher salary in Illinois was $61,083 in the 2014-15 school year, according to National Education Association data. That’s higher than the national average of $59,452.

But factoring in pension costs better reflects “the true cost” of a teacher, report author Max Marchitello said.

“Any inequity that exists in the distribution of teachers will be amplified in the pension system under its current construction,” he said.

The study looked at 10 years of teacher salary data. It found that the funding gap between wealthy and poor schools was $582 in 2012. When pension spending was added, the gap grew to more than $1,200, according to the report.

A similar disparity is seen in districts with high concentrations of black or Hispanic students compared to mostly white schools.

The state contributes 10.1 percent of teachers’ salary into their pensions, while an employee is responsible for 9 percent and districts chip in 0.58 percent. Chicago Public Schools are not included because the district has its own pension system.

Critics of the current pension system say it encourages districts and unions to add pay and incentives to teacher salaries, thus increasing pension contributions without feeling the impacts.

“Typically, the state is providing help to districts most in need. But it does something the opposite when it comes to pensions, it actually sends more money to districts that are the wealthiest,” according to Ted Dabrowski, vice president of policy at the pro-tax reform group Illinois Policy Institute.

He wants the districts to take the lead on pension contributions instead.

The Illinois Federation of Teachers, a union, says the system is “not to blame for the disparities between districts. Rather, it’s because Illinois doesn’t fund public schools equitably or adequately,” spokeswoman Aviva Bowen said.

The state’s Teacher Retirement System dismissed the report, with spokesman Dave Urbanek saying it was “comparing apples to oranges.”

The pensions system is “equitable because the amount that the state pays is a percentage of (teacher’s) salary, it’s a level percentage,” he said.

The current debate over school funding between Democratic lawmakers and Republican Gov. Bruce Rauner will not impact the pension structure.

Follow Ryan on Twitter: @rpatrickdelaney

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