"What we’ve suggested is that local
districts have a little skin in the game when they hire teachers and
administrators and set their salaries. They should be required to set
aside money into the pension system for their future retirees.” Senate
Leader John Cullerton (McQueary, Kristen. Illinois schools may chip in…
NY Times 19 February 2012).
“Unlike elected officials in Wisconsin
and Indiana, we work with unions in Illinois.” – John Cullerton to Phil Kadner
16 February 2012).
“Some Skin
in the Game” (…or...Making local school districts pay for pension costs).
Idiom: While many
people give credit to sagacious investor Warren Buffet for the phrase “to have
some skin in the game,” Mr. Buffet has strongly denied such attributions.
In essence, the idiomatic phrase means being personally, emotionally, or
financially vulnerable to a possible venture and, therefore, connected to it at
all levels of possible aftermaths. According to William Saffire, the
Oxford English Dictionary explains the “skin game” as a card game in which each
player has one card which he bets will not be the first to be matched by a card
drawn from the deck; so dealer or player all have equal chances of winning or
losing
Sadly, in the case of the public pension system, it appears to be
losers all around. The concept of shifting financial responsibility for
the teachers’ pension from the State of Illinois to local school districts has
become increasingly popular in the last few months.
The president of the senate, Mr. Cullerton, sees this transfer as an
opportunity to force local districts to keep the state’s increasing costs and
teachers’ salary increases in check. Costs for pensions per district
would become an essential part of union contract negotiations (McQueary,
Kristen).
For Governor Quinn, the “rendezvous with reality” will also call for
everyone’s sacrifice, including the local districts.
Regarding teacher retirement benefits, the state could save nearly
$1.5 billion; according to the associated press, Governor Quinn has given
the nod to those who would seek such a shift in responsibilities (http://www.stltoday.com/news/local/illinois/quinn-looks-to-shift-teacher-pension-funding-to-local-school/article_bed030a4-1a1d-56f9-bcd0-c2fedce38fa3.html). Such savings
would allow the State of Illinois to continue making payments to reduce the
unfunded liability, to continue to provide and improve human services, and to
force local districts to enact new procedures for dealing with public unions
that want better benefits for their employees.
On the other hand, many Republicans and others - including the
Illinois Association of School Boards – figure the costs would be injurious to
local taxpayers as well as the districts themselves. Such requirements
might bring “an additional $800 million in contributions toward teacher
pensions,” which coincidentally is the projected amount the state of Illinois
will owe to the pension system this year - without their required payment to
the unfunded liability (McQueary, Kristen). In short, it may be more than
coincidental that this proposal will allow the debtor (the state) to pay simply
the interest on past non-payments and not the current bill that is due for 2012.
Meanwhile, Republicans in the General Assembly realize what kind of
pressure is being put on the local districts and the citizens who live within
those school boundaries. They foresee an increased burden on the
local taxpayers and the school boards. “’It could either be a property tax
increase or, depending on how they structure the deal, they’re going to have to
cut whatever those costs are within [the] school district,’ Rep, Ed Sullivan, R
– Mundelein, said. ‘So you’re either going to lose teachers or have a massive
property tax.’”
(http://www.stltoday.com/news/local/illinois/illinois-republicans-against-shifting-pension-costs-to-school-districts/article_aa4db910-5cfe-11e1-b880-001a4bcf6878.html) Perhaps
there will also be cuts in programs, such as Industrial and Theater Arts, Music
and Creative Writing? Etc.?
Some truths are still evident. School income – also wealth –
is created by a combination of three elements:
1. Property Wealth –
This is the combined value of all the real estate in a school district which,
in turn, determines just how much money the local schools can generate from
their property taxes. According to Dick Ingram, Executive Director of
TRS, “Illinois is a state of financial extremes.”
2. Tax Effort – The
total assessed value of real property must be multiplied by the school
district’s tax rate to determine the amount of property taxes the district can
receive. Tax rates are subject to local referendums; therefore, taxpayers
themselves decide whether or not to support their local schools and by how
much.
3. State Equalization
Aid – The State of Illinois is supposed to provide equalization funds to
compensate for the differences in local property wealth, but the dollars can
never meet the vast gaps in differences. District relying on state aid
have far less than districts that can rely on wealthy property taxes.
Need an example?
In south suburban Ford Heights, where the median annual household
income is about $16,000 and the average home is worth $42,000, the local
taxpayers pay a property tax rate of 21.7 percent. On the other hand, in
Winnetka, where the average home is worth $1 million, and the annual household
income is $207,955, the property tax rate is about 6%, according to statistics
compiled by the Cook County clerk (Kadner, Phil. Pols pull bait and switch on
teacher pensions, taxes. Chicago Sun-Times 12 February 2012).
Here’s a real rendezvous with reality:
Shifting the costs of the state’s pension problems to local
taxpayers would break the poor but only slightly distress the wealthy.
(Personally, while I can live with the latter, I find it unconscionable
to do the former).
Augmenting that most unacceptable fact, Illinois (in 2006!) had the most
inequitable education funding system in the country, with per pupil spending
ranging from a high of almost $23,700 to a low of less than $4,500 (Center for
Tax and Budget Accountability. “The current status of public education funding
in Illinois,” 2006). Today, while taxpayers in Schaumburg pay a composite
tax of nearly 7.7%, those who struggle in poverty-ridden Robbins will pay
property taxes ranging from 9 to 10.3%, despite an income average of at least
one third that of Schaumburg.
In the case of House Speaker Madigan, “skin in the game” means,
basically, if you are a public employee, it’s your skin. “The question is
how to do that (solve the pension problem) within the confines of the state
constitution, which says public employee pension benefits cannot be reduced
once they are given. Madigan outlined a potential trade-off. ‘The
question is for a person in a public job today, can we say to them “Everything
you’ve earned up to today you keep, no change?” But…can we say to that person,
“Starting tomorrow, it’s going to be a different deal. It won’t be as
rich. The benefit level will not be as high, but we will save the
stability and integrity of your pension system.’” (http://www.pennlive.com/newsflash/index.ssf/story/quinn-asks-lawmakers-to-put-some-skin/80c6ffd8eea873ac52a4b9427d90ce9e)
