More than a few private sector employees admit to being envious over the monthly pension checks those in the public sector collect when they retire.
Some of it is directed toward those receiving pensions under the Teachers’ Retirement System of Illinois. Taxpayers see former school superintendents getting annual pensions of $100,000, or more, when they have little or no paid pensions. And, because the state frequently doesn’t pay its mandated share to the TRS, they wonder if their taxes will go up, or school services will be cut to cover the state shortfall.
At the same time, school employees who have faithfully paid into TRS all their working careers have their own concerns: Could the state’s pension problems mean they’ll pay a higher percentage of their salaries into TRS, or worse, will the money run out?
TRS is a public pension plan that covers Illinois’ public school teachers and administrators, who generally aren’t eligible for Social Security. That means the only retirement benefits most receive are through TRS.
“Pension envy … is a symptom of the struggling economy,” said Dave Urbanek, TRS spokesman. Many people working in the private sector and headed toward retirement aren’t confident about their 401Ks, for example, and envy others who have a more reliable cushion, he said.
But it should be noted, he said, that active teachers contribute 9.4 percent of their paychecks to the TRS; the school district’s share is 0.58 percent. Both are set by state law. The state is required to pay the rest.
This year, the average annual TRS pension in Illinois is $46,000. About 60 percent of pensions paid to TRS retirees are under $50,000; 3 percent are above $100,000, said Urbanek. There are 362,000 TRS members — active, inactive and retired — in Illinois. At the end of June, there were 90,967 TRS retirees in Illinois.
In November, 371 people who retired from Bloomington District 87 schools received TRS pensions, and 365 from Unit 5, according to TRS.
Concern is focused on TRS’ huge $43.5 billion unfunded liability and worries that the system will be unable to sustain itself. In recent years, it has been hurt by both low interest on its investments, and the state not paying its share, Urbanek said.
However, state money already has been by allocated for pensions in 2013. “We will have enough money to pay pensions for decades,” he said.
Still, the uncertainty about the future of the pension system has caused some educators to retire as soon as they were eligible to ensure they will get the pension they had counted on. But it has not led to a mass exodus, administrators say.
Leo Johnson, of Pontiac Township High School retired earlier this year. The former superintendent was invited back this fall to work part time with co-interim Superintendent Jim Davis, who also retired when he was eligible to receive his TRS pension.
Both men can only work up to 100 days a year according to TRS rules. The team will share responsibilities until July 1 when a new, full-time superintendent, Jon Kilgore, takes over. Johnson also is an education consultant for a Peru law firm and an adjunct teacher at the University of Saint Francis in Joliet.
“I put my education to work,” said Johnson, who collects a monthly TRS pension of $8,544. Although his pension and extra jobs allow him a lifestyle he enjoys, he said the state’s pension systems are likely unsustainable the way they currently operate.
“Probably they need to be reformed to do something the state can afford,” he said. “Most people in TRS realize benefits may be scaled down.”
Davis retired from Cornell District 426 two years ago, and was part time interim superintendent at Odell Elementary School District 435 last year. Davis’ monthly pension is $5,963. He is choosing to work while he is healthy, as long as he has time for vacations, he joked. He retired at age 60 and doesn’t expect to work regularly at age 70.
When money was tight in school districts in recent years, it became popular for them to offer teachers help in paying part of their TRS pension obligations instead of giving raises.
For example, Olympia pays all 9.4 percent of their teachers’ contributions to TRS.
“Teachers gave up salary increases in lieu of pension (contributions),” said Olympia Superintendent Brad Hutchison, adding the policy was phased in over six years and has been in effect the last two.
Similarly, in Unit 5, the 9.4 percent of administrators’ contributions are covered by the district, and 2.2 percent of a teachers’ pension share is funded by Unit 5 as a benefit. Other districts aren’t following that trend.
“We all pay our own,” said Johnson, referring to Pontiac District 90. Bloomington District 87 also doesn’t fund any of its teachers’ contributions.
Another benefit for Illinois teachers and administrators is a 6 percent salary increase each of the last three years before retirement. This replaced a one-year, 21 percent increase the last year before retirement. When that incentive was removed with the last round of TRS pension reform, there was a surge of retirements across the state.
Today, in return for those three years of hefty pay increases, teachers and administrators must notify the district three years in advance of their retirement to help with financial planning and staffing. “It makes a difference. It helps us fix our costs,” said Jeff Malinowski, payroll administrator of Unit 5.
But those raises just before retirement also put more stress on the pension system. “The (6 percent) bumps drive the pension and the cost of the pension up,” Urbanek said.
The funding of public employee pension funds is an issue in many communities across the country as they struggle to meet their obligations to retirees. In the second day of a series, The Pantagraph examines the funding levels of pension funds that cover Twin City area fire and police, other public employees and retirees from area school districts.
A look at how cities are handling unfunded liabilities related to post-employment benefits, such as life and health insurance
Chart shows the top 10 monthly pensions paid to former employees who worked at and retired from Bloomington District 87, McLean County Unit 5, Pontiac Township High School District 90 and Olympia District 16. The districts were included in a Freedom of Information Act request submitted by The Pantagraph to the Teachers' Retirement System of Illinois. For a complete list of retirees from these districts, visit pantagraph.com/publicpensions. Former employees who worked in one or more of these districts, but retired from another are not included.
Retiree...Pension...Years/service...School district...Former job title...
Robert Nielsen...$13,244...35...Bloomington District 87...Superintendent...
Alan R. Chapman...$10,297...37...McLean County Unit 5...Superintendent...
Donald F. Hahn...$ 9,175...34...Olympia District 16...Superintendent...
Richard (Rick) Laleman...$ 9,109...35...District 87...Asst. supt. human resources...
Robert Wilhelm...$ 9,036...36...Olympia...Business manager...
Robert B. Meeker...$ 8,863...34...District 87...Asst. superintendent/business...
Harlen "Butch" Cotter...$ 8,380...38...Pontiac Township HS 90...Superintendent...
Leo E. Johnson...$ 8,544...35...Pontiac Township HS 90...Superintendent...
Leonard E. Roberts...$ 8,451...31...District 87...Superintendent...
Howard T. Davis...$ 8,325...38...Unit 5...Asst. superintendent/ instruction