Superintendents Toolkit 2013

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 A four-year freeze – as opposed to the six-year freeze from a previous proposal -- on the cost-of-living adjustment (COLA), and when the COLA resumes not paying it until a retiree reaches age 67 and then allowing the 3 percent compound COLA only on the first $25,000, the first $20,000 for retirees who also receive Social Security.  A requirement to fully fund the state’s pension systems by 2043.  A stronger guarantee that the state will make its required payments to the pension systems.  The provision requiring employees and retirees to choose between the compound COLA or accepting a reduced COLA but having access to the state’s health care plan and being able to count future increases for pension benefits. The Senate passed the choice bill in May of 2012, but only for SERS and GARS. The House never voted on that bill. SB 1 also includes TRS and SURS, but currently does not include the judges’ system, the stated reason being to avoid a conflict of interest. SB 1 also does not include the controversial provision for the state to shift its portion of the normal pension costs to local school districts, but Senate President John Cullerton (D-Chicago) has said that he expects the cost shift to be introduced as a separate bill after pension reform passes. Part B includes:

Talking points:

6. Regarding the cost shift issue, IASA’s position has been that we are opposed to the cost shift because of the negative impact it would have on districts already struggling because of the huge cuts to General State Aid and Transportation the past few years. 7. If the cost shift must happen, then IASA’s position is that it needs to be phased in at one- half of 1 percent per year, that it should be capped at half of the normal pension costs with the state retaining half of that cost, and that a source of revenue must be identified to pay for the shift to local districts. 8. Reserve funds are not a good revenue source to utilize as they are a school district’s only safety net to protect against late or reduced payments by the state, unexpected costs or to plug the budget hole for districts that have operating deficits – which now is about 67 percent of districts according to ISBE. 9. Even districts that currently pay the teachers’ portion of the pension contributions according to their labor contract cannot be expected to use that money to pay for the cost shift because teachers unions consider that to be part of the total compensation package.

1. All references to the pension issue should be framed in the context of constitutionality and the impact on education. (For example, one long -range unintended consequence of slashing pension benefits for educators might be to make teaching and the field of education a less attractive pursuit for future college students.) 2. The discussion by superintendents should be about the impact on teachers and the long-term effect the cuts might have on attracting and retaining good teachers. 3. The IASA has consistently said it would support reform measures to stabilize and sustain the pension systems as long as those changes are constitutional, implemented fairly and include a real guarantee that the state would meet its pension obligations. 4. Specifically, IASA has said that it even would support employees paying more for their promised benefits as long as the amount was based on actuarial numbers and did not include paying for any of the unfunded liability caused by the state skipping its payments. 5. Teachers and school administrators have faithfully made each and every pension contribution required of them.

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