The Times - Big raises near retirement: End-of-career teacher salary spikes affect pensions /cms/images/spacer.gif

June 26, 2015 10:39 PM
Original Article, click here.
David Giuliani, [email protected], 815-431-4041 



Big raises near retirement: End-of-career teacher salary spikes affect pensions

An Ottawa Township High School District teacher who retired in 2013 saw his pay dramatically increase in his last four years — from $91,968 to $116,107.
A Streator Elementary School District teacher who left the year before experienced a similar spike – from $76,686 to $96,815.
This is according to the information from American Transparency's Open the Books website, which tracks government salaries in Illinois.
The local salary increases are commonplace among Illinois teachers, but unusual for most people.
Across the state, teacher union contracts typically guarantee 6 percent annual raises in the last four years of teachers' careers. This area is no different. The Times reviewed contracts for six districts — Ottawa and Streator's elementary and high school districts, Woodland Community Unit School District and Marseilles Elementary district.
These salary spikes are designed to increase teachers' pensions, which are largely based on the four highest-paying years of the last decade of teachers' careers. While school districts pay the higher salaries, they don't suffer the long-term costs of their decisions. With the exception of Chicago, the state covers school districts' portion of pension costs.
Some in the General Assembly have called for the state to shift pension costs to local districts. Doing so, they argue, would hold districts accountable for their salary decisions, particularly the 6 percent raises.
School districts argue against such a move, saying it would result in dramatic property tax hikes.
"The problem I have with that is that our revenues from the state are so low," Ottawa Elementary Superintendent Cleve Threadgill said. "If we take on the cost shift, it'll hurt kids. If it's going to happen, it would have to be gradual."
Years ago, districts often gave increases well more than 6 percent near the end of teachers' careers. But in 2005, the General Assembly passed a law limiting raises to 6 percent, with districts required to cover the costs for anything above that. Since 2005, the six districts in Ottawa, Streator and Marseilles have forked out $173,525 to the teachers' pensions system as a result of exceeding 6 percent.
Asked about the end-of-career spiking, Don Harris, vice president of the Ottawa Township High board, said the increases are a result of the negotiating process and that the district complies with state law.
Board member George Shanley said the raises are an early retirement incentive.
"That's so we can get younger teachers at a lesser cost," he said.
Threadgill agreed. This last school year, nine Ottawa Elementary employees — both teachers and nonteachers — retired. Entry-level employees are replacing them, which will mean a savings of $341,000 a year, Threadgill said.
Earlier this year, Gov. Bruce Rauner called for limiting teachers' end-of-career raises to the consumer price index, which, in the last five years, ranged from 1.6 to 3.2 percent.
Rauner's proposal would make a difference. In the example of the Ottawa Township High teacher, he would get a starting annual pension of $58,319 using the consumer price index. That's compared with $63,756 after four 6 percent raises, according to the Manhattan Institute's pension calculator. This example assumes the teacher worked 30 years and retired at 55.
Dave Urbanek, spokesman for the Teachers Retirement System, said he wouldn't comment on the effects of the 6 percent increases on the pension fund.
"This is not vital to the administration of pensions," he said.
Matt Dietrich, executive editor of Reboot Illinois, a watchdog group, said the 6 percent hikes have a huge impact on the pension system. His group agrees with tying end-of-career raises to the rate of inflation. 
For local school districts, Dietrich said, approving 6 percent hikes in union contracts is an easy concession to make.
"When you have the state picking up a big portion of your pension costs, why not add more salary? And you can have good relations with the teachers union," he said. "For accountability, local school districts need to pay all pension costs. That is something that has to happen eventually."
Original Article, click here.
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