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State Pension Hole Creates Dilemma for Deerfield, Highland Park Schools

Proposed shift of pension liability from state to local school districts could mean bigger class sizes and less financial stability for Highland Park and Deerfield schools.

Pension reform legislation that would shift responsibility for teacher retirement from the state to individual school districts was introduced in the Illinois General Assembly last week with the potential to drastically change schools in Deerfield and Highland Park.

Authored by state Rep. Elaine Nekritz (D-Northbrook) and state Rep. Daniel Biss (D-Evanston), the proposed bill does a number of things to help ease the unfunded portions of pensions for a number of public employees including teachers.

Though most of the provisions affect the state as a whole, shifting the burden of teacher pensions from the state to individual school districts will put an added though not unexpected burden on Deerfield Public Schools District 109, North Shore School District 112 and Township High School District 113.

“We don’t know what’s coming from the state,” District 109 Assistant Superintendent for Operations and Finance Greg Himebaugh said Nov. 12 at a Board of Education meeting when explaining a reason to hike the real estate tax levy the maximum amount.

The problem could become more acute for Deerfield and Highland Park schools because they can increase the tax levy no more than 5.5 percent or the amount of the consumer price index, whichever is lower, according to state law.

“We cannot raise property taxes to pay for an increased pension burden,” Himebaugh said. “We and all districts are subject to the tax cap and none of the proposals being discussed offer districts the ability to tax beyond the cap to pay for the increased costs.”

One solution as Himebaugh suggests, is allowing school districts to increase property taxes at a greater rate. That could be coupled with a reduction of state income taxes. Neither is a solution Nekritz sees as a current possibility.

Tax Relief From State Is not Likely

“I don’t think that would fly,” Nekritz said. “We will phase this in slowly,” she added when saying there would be no change to the property tax cap. “There is no way around a difficult decision right now.”

One person who intends to oppose the legislation when she gets to Springfield is state Sen. Elect Julie Morrison (D-Deerfield). She was against the idea during her campaign and she has not changed her mind.

“It’s something I’m not in favor of, absolutely not. It’s a slippery slope. This will just open the flood gates,” Morrison said. “The state is responsible for this huge debt.”

Himebaugh has been developing contingency plans if the legislation should pass. He has been adjusting his long term budgeting for just a possibility.

 “Every district will have to find other ways (such as) cost cutting via higher class sizes, eliminating savings/reserves to afford the additional burden,” Himebaugh said. The current pension cost for District 109 teachers is $1.5 million which is slightly in excess of three percent of the District’s operating budget, according to Himebaugh.

State May Step in With Other Aid to Education

Nekritz is hopeful as the obligation is transferred to individual school districts the state will be able to give other aid to education.

“We have not been able to spend anything else on education because of the pensions,” Nekritz said. “This will allow us to spend on education in ways that will make sense.”

Officials at Deerfield and Highland Park High Schools are taking more of a wait and see attitude, according to Communications Director Natalie Kaplan. Kaplan is hopeful the burden will be incremental and not more burdensome than what is contained in the proposal by Nekritz and Biss.

“If an incremental increase is decided upon, we hope that annual increase does not exceed a one half percent for any parties annually,” Kaplan said. “This would at least make the annual impact more sustainable for the parties involved.”

State Rep. Elect Scott Drury (D-Highwood) was contacted for comment for this story Thursday and did not respond by deadline for the article.

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Barbara December 10, 2012 at 02:31 PM
I will be very interested in rep Drury's comments. This issue has been talked about for a year, so he's had time to think about it.
RB December 10, 2012 at 03:33 PM
School Districts have pumped up pensions for years. Because it became a State obligation, the Districts did not control this practice. Now, it's time to pay the piper. Once again, our School Districts will demand even more tax revenue from our home owners. It's time to balance the books by raining in out of control school boards and other overhead. Why does a Village the size of Deerfield have 2 School Districts, a township, a library district, a Park district and Village Governmental bodies and associated employees and pensions? Nobody cared before. Someone should care now that it's about to be on the backs of homeowners. Cut overhead by combining schools districts, rolling the park district into the village and ending the township all together. Its time to act.
forest barbieri December 10, 2012 at 06:51 PM
So after the State mismanaged pensions relative to blindly funding and allowing rules that spiked pensions at every level as well as providing high level pension recipients to then take advantage of second careers and other high paying state funded jobs while seeing no reduction of their pension benefits now they throw the ball to the School Districts washing their hands and taking the burden off of the States books. Once again, the taxpayers will take it in the shorts as we will now have to pay higher taxes.....of which will be blamed on school districts and conflict with capital requests to keep this ridiculous pension system going! It is like our legislators that milk the system with their main focus on after public life a fat pension plus high paying lobby or favor seeking position. Public servants....ba humbug, we are here to serve up the sweet life for them and their families and crony’s. We taxpayers are the SERVANTS! Let’s go to a 401K type of program wherein they get back what they contribute and have no ability to artificially inflate at our expense. Live within your means!
RB December 10, 2012 at 07:26 PM
The State did mismanage. The schools districts are not innocent due to salary spiking etc. They have been boosting pensions above collected revenue projections for years.
DeerfieldResident December 10, 2012 at 08:15 PM
Couldn't agree more. We need to take these public pensions to a defined contribution program (like a 401k) rather than the defined benefit programs. Sorry public employees, be we cannot afford to keep these pensions in place. I would be ecstatic to see all new employees placed on a new plan and let those already in the pension system stay with it. It's such an obvious solution and I'm not sure why it's not happening. It's crystal clear that these pensions cannot remain.

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