Kadner: Shifting teacher pensions onto property tax bills

* Posted at the request of the GEA Presidents

 

Illinois voters better start lobbying their lawmakers, or they’re going to be hit with a whopping property tax hike in coming years and see schools unable to educate their children.

 

Gov. Pat Quinn, Senate President John Cullerton (D-Chicago) and House Speaker Michael Madigan (D-Chicago) all have talked about shifting the state’s obligation for paying teacher pensions onto local school districts.

 

That’s about $800 million a year that homeowners and businesses will have to pick up on their property tax bills.

 

Cullerton told me any such transfer of pension obligations would be phased in over a period of years and also suggested that school districts could cut costs to reduce the burden on taxpayers.

There’s been no public outcry from the usual suspects over this proposal. Educators, municipal leaders and state legislators from the Southland have been silent for the most part.

 

“Nothing’s really been decided,” one senator recently told me. “Everything’s up for discussion because the state is in such bad financial shape.”

 

But I’m not buying it. It’s not mere coincidence that the governor and the two legislative leaders happened to mention this shift of pension funding to local school districts at around the same time.

 

“It’s certainly an idea that has some traction,” said a legislative lobbyist for the Illinois Education Association, the state’s largest teachers union, who has been involved in talks with elected officials in Springfield about pension reform. “It’s the one idea for pension reform that passes constitutional muster.”

 

The IEA has indicated that it would legally challenge most of the other pension reform plans that have been suggested.

 

Among the items being discussed is whether school districts could collect money for pension funds outside the current property tax cap. In other words, could they levy a tax just to fund the pensions, similar to what municipalities do to finance their pensions?

 

I made a few phone calls to find out what the effect might be on some Southland school districts.

If Orland District 135 were to pick up the state’s entire share of the pension burden, it would cost the district $8 million this school year. For Consolidated High School District 230, which also serves Orland Park, the figure would be $13.5 million.

 

So that would be quite a double tax whammy for property owners in Orland Park.

 

There’s no doubt the state needs to slash its pension costs. Its overall obligation is estimated by the Civic Federation of Chicago to be about $6.5 billion in fiscal 2013. That’s about one-fifth of the state’s overall budget.

 

And the state has about $80 billion in unfunded pension liabilities from previous years. That’s because the state largely ignored its pension obligations for years.

 

“Now that they have messed up the state’s finances,” District 135 board member Joe LaMargo said, 

 

“They want to put it on the backs of the school districts. The state assumed these pension obligations, not the school districts.

 

“Our property taxpayers can’t assume any more of this burden. That’s why, for the first time in anyone’s memory, we froze our levy this year.

 

“There are people paying $8,000 and $9,000 a year property tax bills living on fixed incomes. It isn’t right to keep increasing that burden.”

 

My guess is that state lawmakers will try to phase in the shift of teacher pension fund payments over a period of five years.

 

There will be a 2 percent additional cost two years from now that they hope no one will notice and then maybe another 2 percent in 2015 until people become accustomed to it. That would minimize the public outrage at the Legislature and the governor.

 

In addition, people in Springfield tell me they don’t expect a vote on this issue until after the March 20 primary election or maybe not until November, when a lot of legislators will be leaving office.

District 230 already pays about $14 million in annual special education costs because the federal government, which mandates special ed, doesn’t pay its fair share.

 

The state has cut transportation costs for busing, although it requires transportation for some schoolchildren. And the state has underfunded public education for 25 years.

 

If school and town officials and voters don’t scream in protest about this proposed shift in pension funding, a deal will be cut behind closed doors.

 

Unfortunately, the silence until now has been deafening.