64 Percent of Illinois School Districts Pick Up Pension Contributions for Teachers

This issue of employee contributions is such a massive scandal that no elected Republican can legitimately claim ignorance about — it has been going on for a very long time. I was, in fact, involved in first bringing this to light a number of years ago. Here is Benjamin VanMetre writing at the IPI:

Ending pension pickups is a simple, responsible way for cash-strapped school districts to free up money for the classroom.

Retirement savings come from three components: employee contributions, employer contributions and investment returns. That’s typically the standard for government employees and private-sector workers alike.

But school districts in Illinois have become an exception to that standard in two ways.

First, the employer does not pay the employer share of teacher retirements in Illinois. The state, not the school district, pays the employer portion of teacher pensions, even though teachers are employees of the local school districts and not the state.

Second, the employees often don’t pay the employee share of their own pensions either. Teachers are obligated by law to pay 9.4 percent of their salary into the retirement system. But over the years, school districts began paying, as a benefit, the teacher’s required contribution. This practice is referred to as a “pickup.” Pension pickups have become a standard in nearly two-thirds of Illinois’ school districts.

The end result is that many teachers are paying nothing toward their pensions. Taxpayers make the employer contribution through sales and income taxes and taxpayers pay the employee share through local property taxes and other fees.

Every year, the Illinois State Board of Education compiles its annual “Illinois Teacher Salary Study” by asking a series of questions directly to each school district, one of which is whether the district picks up the teacher’s share of the 9.4 percent employee pension contribution.

Read more: Illinois Policy Institute

Image credit: www.illinoispolicy.org.