Education Week - October 2, 2019 - 8

States, Districts in Tug-of-War Over Educator Pensions
CONTINUED FROM PAGE 1

lier this year. It was seen politically
as a bailout for districts squeezed
by a promise they made in 2013 to
take on a larger share of the state's
teacher-pension liability.
But a study published last week by
the Opportunity Institute, an advocacy organization based in Berkeley,
Calif., shows that because the state
made a flat percentage payment for
every district, wealthier districts benefited more than poor districts.
"It exacerbates inequities and in a
hidden way," said Carrie Hahnel, who
conducted the study for the Opportunity Institute, which pushes for more
funding for poor children. She advocates for the state to change the way

it pays for pensions. "What this does,
it takes a great deal of state funding
and cuts against [the state funding
formula]."
In Illinois and Connecticut, where
the states have historically carried the
majority of the K-12 pension burden,
politicians are at odds over whether
to offload more of those costs onto
districts and how to go about doing
that.
"School districts and teachers are
the ones who have consistently made
our full contributions to the system,"
said David Bein, the assistant superintendent of business services for Barrington 220, a suburban district outside Chicago. "The only party that has
not has been paying its full share is the
state. I think it's pretty disingenuous

to say, 'Now we're going to transfer
the responsibility.' "
K-12 finance experts have historically known little about the ways that
districts benefit from states' contributions toward pension costs. But last
year, the Government Accounting
Standards Board, a private standardssetting organization, began asking
states to break out state pension subsidies by school district.
The resulting database was a bonanza for researchers who have always wondered what impact pension
costs have had on state and district
K-12 spending.
A paper by several school finance
researchers that's currently being
peer-reviewed found that 23 states
in 2018 spent an estimated $19 bil-

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lion on K-12 pension costs. (By way
of comparison, federal Title I spending for disadvantaged students
across all states was $15.8 billion
that year.)
Those same researchers found that,
in some states, the pension subsidy
for districts was minimal-Georgia's
$4.5 million contribution, for exam-

If your pot of K-12
money is fixed,
more and more
of that money is
getting eaten up
by pensions."
JAMES SHULS
University of Missouri-St. Louis

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ple, amounted to just $2 per student.
But in Connecticut, Kentucky, Massachusetts, New Jersey, and Vermont,
the state pays for the entirety of teachers' pension costs.
In every case, researchers found,
the pension debt was distributed in a
manner blind to district need.
As pension costs continue to climb,
the researchers' paper said, "a serious unintended consequence might
result: Some states might be offsetting progressive state aid with state
pension subsidies that favor wealthy
school districts. ... We predict that, in
some states, state pension spending
is running completely counter to the
progressive purpose of general state
aid."
James Shuls, a professor of educational leadership and policy studies at
the University of Missouri-St. Louis
and one of the authors of the paper,
urges states to engage in a more
robust debate over which districts
should pick up their share of pension
costs, similar to the same sorts of debates states engage in with general
K-12 state aid.
"If your K-12 pot of money is fixed,
more and more of that money is getting eaten up by pensions," Shuls said.
"Shifting some of the onus onto districts is the right way to go."

Political Hurdles
That's much harder than it sounds.
Two years ago, Connecticut's thenDemocratic Gov. Dannel Malloy
slipped into his budget a proposal to
force municipalities to take on more
than a third of the state's K-12 pension
costs in order to help close a $1.7 billion
statewide deficit. Local officials threatened to sue, arguing that the state created the pension crisis and therefore
was legally required to pay all its costs.
The state's superintendents association said the proposal was "at best
extremely foolish public policy and at
worst highly irresponsible."

Malloy killed the proposal. But
this summer, a commission recommended several ways to pay down the
costs. Politicians, under the leadership of a new governor, Ned Lamont,
also a Democrat, are expected to take
up the issue again this winter.
If states ask districts to pay more for
pension costs, many districts would
be forced to increase property taxes,
which voters have traditionally been
hostile toward.

Illinois Battle
That dilemma is front and center
in Illinois. That state has a statewide
pension system that covers all districts but Chicago, which has its own
teacher-pension system.
In 2017, Illinois passed a new K-12
funding formula to increase state
school aid and redistribute it based on
student need. In order to get the funding formula across the finish line, state
and district officials agreed to set its
pension crisis aside. They also agreed,
as a rule, that no district would ultimately lose funding.
So Jessica Handy, an influential lobbyist with Stand for Children, which
promotes more spending on poor children, received immediate backlash
when she came up with a proposal to
have wealthier districts pay more of
their share of pension costs.
The state's $4.5 billion payment
toward its Teacher Retirement System this year equaled the amount
of general K-12 aid it gave to districts that benefit from that pension.
Because the state spends so much
money on pensions, it's not able to
spend as much on poor districts,
Handy said.
"We fixed one side of the coin, but
we still had this major funding inequity," she said, referring to the state's
new funding formula.
Bein, the business official in the Barrington district, opposes any effort by
state legislators to increase districts'
pension costs.
"The state is going to continue
to collect money, use it for other
stuff, and then transfer the responsibility to pay to districts while giving
[them] no additional revenue to do
so," he said. "To me, that seems like
a bad idea."
He said Illinois lawmakers have
severely limited districts' taxing authority and districts, many of which
have already reached their taxing cap,
would be forced to cut services.
Such cuts would likely fall on the
backs of teachers, warns Will Lovett,
a lobbyist with the state teachers'
union. He also worried that changes
to teacher benefits could hurt recruitment and retention efforts amid a
statewide teacher shortage.
"By creating this type of proposition, you now create winners and losers," Lovett said about Handy's proposal. "We need to get Illinois to fulfill
its financial commitment. If you put in
a career of 25 or 30 years as a teacher,
that you're going to be able to retire
in dignity, that means a lot for our
educators."

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Education Week - October 2, 2019

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