Proposed Pension Reforms to Take Toll on NLSD122, Teachers

The proposed pension reform legislation was a topic for discussion at the New Lenox School District 122 Board of Education Special Finance Committee meeting Thursday. A number of proposals floated around Springfield this week during veto session, but one proposed by Rep. Elaine Nekritz, (D-Northbook) found some bipartisan support.   

Howard Crouse, vice president of PMA Financial Network, Inc., Naperville, conducted a financial planning presentation at the finance committee meeting. He said it looks like the state is planning on Jan. 7 or Jan. 8, 2013 to implement a program that shifts the burden for pension reform on the backs of the local districts. The program is expected to begin July 1, 2013.

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"There's projected to be an increase in the employer (pension) obligation of 1 percent per year."

For NLSD122 that 1 percent amounts to about $200,000 the first year and another $200,000 on top of that the next year. The third year it'll be $600,000, said Superintendent Michael Sass. "It's a cumulative thing."

He referred to the 1 percent proposal as "absurd."

All along the school district has been paying its obligation to the TRF, but the state hasn't put in its share. 

However, nothing is yet set in stone. "We're going to be waiting and watching." Another proposal being touted in the Illinois General Assembly calls for .5 percent. We're assuming that there will be some increase, but what that official amount will be, we don't know."

NLSD122 School Board President Nick DiSandro said, "The state had an agreement to pay x-amount of the bill and now it's not going to pay for it. Our hands are tied. We have no say so."

who currently serves as the Assistant Republican Leader in the House, said something has to be done. The state can't afford to continue paying these pensions. As for Nekritz's proposal, she said, it has some merit. "But I think it brings up more questions than answers. There have been a lot of proposals floating around."

In any case, the prospect of passing it to the locals is a "non-starter." If switching to the locals is part of the solution, then you let them know up front, not throwing it on them retroactively."

Kosel suggested the plan should make room for a "grandfather" clause, making it part of a new-hire package. "When you offer those salaries and benefit increases, then you can negotiate." 

"There's no question we have to address this pension issue because it's literally eating a hole" in the state's ability to operate," said Kosel.

A former membr of the Lincoln-Way High School District 210 Board of Education, Kosel said she's fully aware that the ideas being discussed are going to make teachers "unhappy" on the face of it," but I want to make sure that our teachers have a pension. They won't if we continue down this path."

Historical reflection on the school pension system

In years past, things were slipped into the pension program; "that was easy to do, but it was never actuarially figured in."

For instance, school districts had been operating under a system that allowed teachers to build up their unused sick days. They could legitimately retire two years early with full benefits.

Proponents of the immediate shift on the backs of the locals, according to Kosel, are not being realistic. School districts are being characterized as if they were being irresponsible by taking advantage of the state's pension program. Speaking from her experience as a school board member, she said "it would have been irresponsible if they hadn't."

School districts weren't about to opt out of a program in favor of adopting a private pay option. The state's pension program left their budgets intact.

Districts need control of the system

"If you want to be fair and responsible, then give (school districts) the right to determine" the shape of the pension system.    

Do you think school districts should control their own pension system?

Tell us in the comments.

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