Schools in Illinois’ neediest districts are being forced to spend federal funds to prop up the state’s Teacher Retirement System.
Public schools that serve a significant number of low-income students receive federal Title 1 grants, earmarked for initiatives to close the achievement gap. If a school uses those funds to hire certified teachers -- reading or math specialists, for example -- the school has to pay into that teacher’s retirement account.
As the state’s unfunded pension liability has grown, the rate that schools have to pay has ballooned from 7 percent of the teacher’s salary in 2006 to more than 36 percent today. For regular teachers, not paid out of Title 1 money, schools pay less than 1 percent.
Jessica Handy, government affairs director with Stand for Children Illinois, says this tactic cost Springfield schools more than 1.7 million dollars last year.
"It’s like poor school districts are a piggy bank, and we’re breaking it open to pay the pension debt,” Handy says. “And the school district that loses the most, across the state, is Springfield School District 186.”
Public school districts in Rockford, East St. Louis, and Peoria also lost over a million dollars.
Stand for Children is pushing legislation to limit the amount of Title 1 funds that could be directed toward the state’s pension debt. Congressman Robert Dold (R-Lincolnshire) has sponsored an amendment to the pending Elementary and Secondary Education Act re-write that would prevent federal funds from being used to pay pension liability. The measure has passed the house and is awaiting action in the Senate.
The TRS board of directors tried to reduce the federal funds rate last summer, but state lawmakers took charge of setting it.