Next teachers strike could be at your school
Chicagoans narrowly avoided their third teachers strike in four years.
The Chicago Teachers Union took negotiations to the eleventh hour Oct. 10, injecting further chaos into the lives of nearly 400,000 Chicago schoolchildren.
The union offered a long list of reasons for the potential strike. Wreaking havoc on communities across the city requires lengthy rationalization. But at each turn of contract negotiations for the last 22 months, the union refused to budge on one sticking point: the pension pickup. Chicago Public Schools finally caved on that issue and reached a tentative agreement with CTU.
If you think that doesn't affect your neck of the woods, you're probably wrong.
For most workers, retirement savings come from three sources: you save money; your employer matches your savings; or you earn money on those savings in the form of investment returns. Pretty simple.
But that's not how it works in nearly two-thirds of Illinois' school districts.
Illinois Policy Institute analyses of hundreds of contracts across the state reveal a common and unaffordable perk: Most school districts “pick up” some or all of the pension contribution teachers are supposed to pay.
Chicago teachers contribute just 2 percent of their salaries toward their pensions. They're supposed to contribute 9 percent. This practice has cost taxpayers $1.2 billion over the last decade.
Chicago offers a useful lesson to the rest of the state: Touch the pickup and prepare for a strike. But in a state where high property taxes are forcing families from their homes, it's a choice districts must find the courage to make.
The pickup is a massive benefit. And it's not fair to taxpayers.
An Illinoisan working in the private sector would need to have nearly $1.5 million saved up to receive the same retirement benefit as the average recently retired career teacher in Chicago, who contributed less than $30,000 to his pension.
It's not fair to kids either. Billions of dollars that could be directed to better libraries, better curriculum and better pay for outstanding teachers — to create a better Illinois — is instead being dumped into a broken system.
The defined-benefit pension system as a whole is broken. The teachers' pension fund is approaching insolvency. Younger teachers are paying into a system from which they may never see a benefit. Older teachers are trapped, unable to take what they've contributed with them if they decide to change career paths.
The deal CPS reached with CTU preserved the pension pickup for all current teachers whose median salaries hover around $78,000. New teachers starting in 2017 will pay the full pension contribution but will receive two raises to make up for the benefit change.
The union argued that removing this perk was the same as a pay cut. It should apply that logic to the tax hikes required to pay for the perk.
The way Illinois navigates teacher pensions is bizarre.
Instead of teachers contributing the fair employee share to their own pensions, the district is on the hook. And instead of the district paying the employer's share of the contribution, the state is usually on the hook.
So local taxpayers contribute what teachers should pay. And state taxpayers contribute what districts should be paying.
In fact, CPS is the only school district in Illinois paying the employer share. Leaders often say that's unfair. And they're right, but for the wrong reasons.
The state should not be paying for these benefits in any school district. Why should Illinoisans across the state be paying for Chicago politicians' bad deals? Or those of any other local leader?
The system needs to change.
The state should stop picking up the tab for the promises of local districts. A 2014 Illinois Policy Institute report showed the state would immediately save more than $750 million by making local districts shoulder the costs for their own teacher pensions.
Of course, the state should not be in the business of hiking local property taxes. They're among the highest in the nation.
Districts need to lower costs for homeowners. How? End the pickups.
Nearly 500 districts would see a net savings by ending teacher pension pickups and starting to pay the employer share of pension contributions, according to data from the Illinois State Board of Education.
Property taxes would fall. Local leaders would be made accountable for local decisions. And state taxpayers would stop footing the bill for outrageous contracts in faraway lands.
Such a seismic shift could spur teachers unions to strike. But if communities stand tall, everyone will benefit.
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