For many years some school boards in Illinois, especially in suburban Chicago, routinely handed out the “two 20s.” What was that? As public school teachers and administrators neared retirement age, they received two back-to-back 20% pay hikes as a way to boost their pensions.
Not all districts were as generous. But the practice of eye-popping end-of-career pay hikes became the norm. Because pensions are based on an educator’s four highest years of pay, school boards would reward their retiring teachers and administrators on the way out the door, passing those now-higher pension costs onto the state.
The pension spiking practice grew so offensive that by 2005, lawmakers in Springfield set a 6% per-year cap, four years maximum, on end-of-year pay increases. That meant teachers could still receive a roughly 24% bump with no penalty. Anything above that would trigger fines to the local school district. In other words, if school boards wanted to unfurl golden parachutes for their retirees, their taxpayers would have to pay for them.
Then school boards started wiggling out from the penalties too. They began offering teachers and administrators post-retirement “bonuses” to get around the caps. They got lawyers involved to protest the fines. They found loopholes in the law.
Chicago Tribune Sports
By 2018 that practice became so widespread that lawmakers in Springfield reduced the caps to 3% per year, for four years. Pay bumps could hit a maximum 12% salary spike, but above that would trigger penalties. Finally, some breathing room for taxpayers on outrageous retirement promises.
Well, the extra lung capacity didn’t last. The budget lawmakers approved and Gov. J.B. Pritzker signed on June 5 reverted to 6% caps per year, for four years. What a haughty snub at taxpayers who have to foot the bill for this last-minute generosity.
Best to be on guard. It’ll be up to local residents to keep an eye on their local school boards. A fiscally responsible board would not sign off on lavish end-of-career perks or exorbitant contracts with superintendents. But school boards don’t always act as taxpayer watchdogs.
Interestingly, ending pension spiking at one point drew bipartisan support. Even Democrats and their leaders — Senate President John Cullerton and House Speaker Michael Madigan — acknowledged the abuses and suggested local schools pick up all pension costs for their employees. That surely would get the attention of taxpayers. That was then. This is now, with a Democratic governor who won’t say no to teachers unions.
Those teachers unions applauded Pritzker’s budget that raised the cap from 3% to 6%. The trade-off, of course, is increased strain on the teachers’ pension fund, which is heavily subsidized by taxpayers statewide. The Teachers Retirement System, which funds the pensions of teachers outside Chicago, as of last summer carried unfunded pension liabilities of more than $75 billion. The system’s own website currently warns visitors that TRS “has less than 40 cents in the bank for every dollar owed to members.”
But sure, let’s hand out raises at retirement time to teachers and administrators.It’s Someone Else’s Money. Why not be generous?