Future of teacher pensions on the ballot in Hinsdale

There’s an important debate occurring right now about the teacher pensions we all fund.

Hinsdale High School District 86 voters will get to weigh in Nov. 4 not just on a minimum wage increase and a millionaires’ tax, but also on whether they think their high school teachers should get 6 percent raises in each of the last four years before retirement.

The end-of-career raise question won’t have the force of law, but the outcome could sway practices statewide, and the debate deserves more attention.

The practice in many Illinois districts for years has been to give teachers and administrators 6 percent or even larger raises in their last four years before retirement. That practice not only provides a significant boost to salaries, but also to teachers’ annual pensions, which still are compounded annually. That means every year, pensioners get a 3 percent cost-of-living adjustment made on the higher amount, which increases the pensions all taxpayers fund.

This practice caused such an increase that legislators passed a law several years ago requiring individual school district taxpayers pay, as a penalty, any amount given that exceeds 6 percent.

Hinsdale District 86 school board president Richard Skoda recently told the Daily Herald it’s common for suburban districts to give out those end-of-career raises.

Remember that Illinois teachers do not pay into Social Security or get any retirement income from it. Teachers typically pay 9.4 percent a year toward their own retirement, though several school district contracts do have taxpayers funding teacher contributions, too. The Chicago Public School teachers’ contract has local taxpayers covering 7 percent of a 9 percent total employee contribution, according to the Civic Federation.

Why give the 6 percent spikes over four years? It can be a retirement incentive to make way for newer and, of course, cheaper teachers.

“End-of-career increases save districts money by replacing a veteran teacher for years following retirement with a less expensive teacher,” Illinois Education Association communications director Charles McBarron said. “It’s not hard to imagine that a teacher without the incentive would receive a smaller [for example, 2 percent] annual increase, then not retire in four years but actually might work an additional four years after that at the considerably higher salary.”

Teaching is a tough and critically important profession. No question. And certainly it’s understandable there might be times when you want to nudge out some veteran teachers.

While many administrators grab headlines with eye-popping annual salaries and pensions, in 2013 the average teacher salary in the Teachers Retirement System that covers districts outside of Chicago was $67,558, while an average TRS pension was $49,800. The CPS average salary in 2013 was $69,321, while the average pension was $48,036.

Giving teachers a 24 percent or more salary boost at the end of their careers is not a gold watch, nor a one-time thank-you gift. It’s something taxpayers will fund for 20 years or more, depending on the age of the retiring teachers.

Are there alternatives?

The Hinsdale teachers union is willing to reduce end-of-career raises to 3 percent over each of four years.

Sheila Weinberg, CEO of the government finance watchdog Truth in Accounting, says more accountability is needed. Certainly taxpayers need to see a price tag. She suggests the full cost of the increased pensions be included in a district’s budget and that the district’s taxpayers pay the pension spike cost.

“Why,” Weinberg asks, “should future taxpayers throughout the state be responsible for covering the Hinsdale school districts’ additional pension benefits?”