Op-Ed: A little-noticed, outrageous pension win for Illinois teachers
Just when you thought that the Illinois pension plan for public school teachers in the state couldn't get any more lavish and benevolent, the Democratic-controlled legislature slipped in yet another boon in the new (un)"balanced" budget.
It amounts to a take-back that can add thousands of dollars to a retiring teacher's pension. Here's how it works:
Last year, the Legislature wisely reduced the 6 percent cap on final-year salary increases for retiring teachers to 3 percent. They took the action to stop local school boards from "spiking" teachers' pay — excessively boosting salaries to jack up pension benefits — in their final years to encourage them to retire.
The incentive for the school districts is that they could dump the extra pension costs on the retirement system — meaning all the state's taxpayers — rather than bearing it themselves.
Last week, legislators reversed their decision to cap the spikes at 3 percent, lifting it back to 6 percent....
The teacher-salary spiking problem is an outgrowth of the early-retirement orgy of the early 2000s. That's when governmental entities, including local school districts, offered veteran employees financial incentives to retire so they could replace them with younger workers who earned less.
Teachers' pensions are based on their final four years of salary. So some school districts — too many — offered four consecutive years of 20 percent salary hikes to goose the pensions teachers would receive. The extra pension costs were picked up by taxpayers, not the school districts.
The irony, of course, is that the higher pension costs will mean more borrowing at high interest rates that will consume money that could be spent in the classroom for the benefit of the children. Those are the children that the teachers' unions claim they care about above everything else.