By 2016 Illinois Will Spend More On Pension Contributions Than Education Funding
But don’t take my word for it. That’s according to the state’s liberal Democrat governor:
Governor Quinn is finally talking the talk on the severity of Illinois’ pension crisis. “Based on current projections” Quinn said earlier this week, “by 2016 the state will spend more on pension contributions than education funding.”
Quinn is right. He acknowledges that pensions are eating into the education funding for our kids.
The Illinois Policy Institute spotlighted the urgency of this issue three months ago in its report Playing Favorites. The results show that contributions to the Teachers’ Retirement System (TRS), dedicated to suburban and downstate teachers, are on target to become the single largest education expenditure within the next five years. That’s because growth in teacher retiree costs are outpacing General State Aid for non-Chicago schools.
It takes a lot of nerve to ask for a 30 percent pay raise. You’d better be sure you had a banner year. Yet in Chicago, where just 15 percent of fourth graders are proficient in reading (and just 56 percent of students graduate), the teachers union is set to strike if the district does not agree to a 30 percent increase in teachers’ salaries.
The average teacher in Chicago Public Schools—a district facing a $700 million deficit—makes $71,000 per year before benefits are included. If the district meets union demands and rewards teachers with the requested salary increase, education employees will receive compensation north of $92,000 per year.
Illinois is hardly the only state with these sort of pension issues, but the problems are perhaps more chronic there than elsewhere. Regardless, the root cause of the problem is defined-benefits pensions. These programs inevitably reach a point where the cost of those collecting the benefits is simply too high for those paying into the program to sustain.
Whether it’s Social Security or defined-benefits pensions for local public workers, the trend is for the programs to inevitably go bankrupt.
What we need are defined contribution programs, where the worker is in charge of their own retirement funds and the state merely responsible for kicking in a set amount in benefits.Tags: illinois, Pensions