Par for the Course

Dramatically increasing a superintendent's salary at the end of his career so as to pad his retirement is nothing new in Illinois.  Rather, it is par for the course.  Illinois seems to have a tradition of doing just this, among our other illustrious traditions.  It is one of the reasons (among other reasons, like the state failing to pay its required contributions in full over the last thirty or so years) that the Teachers' Retirement System (TRS) is in financial trouble.  In fact, TRS is projected to become insolvent by 2029 according to Executive Director Dick Ingram (see here).  School districts all over Illinois have engaged in this practice of increasing salaries and thereby padding retirement pay (you can read about it here).  This may be one of the reasons that Governor Quinn has proposed in his pension reform plan to shift the state's responsibility for TRS contributions to the local school districts (click here for analysis of the pension reform proposals).

You see, this problem of school districts dramatically increasing salaries just prior to retirement in order to pad pensions has been going on for a long time.  Because the burden of those increased pensions is borne by the state, the state has tried to rein in the practice.  In 2005, they passed a law saying that the local districts could continue to do this but that a district would have to pay a penalty (meant to help the state bear the burden of the increased pension) for any raise greater than 6% per year.  Since the passage of that law, it is interesting to note just how many of these end of career raises were exactly 6% per year (the recent proposed contract for the Minooka CCSD 201 superintendent contains annual raises of exactly 6% per year).

Now 6% per year is still a large number (and remember this is just the increase in salary--it does not include the three years of retirement payments or post-retirement health insurance costs) when your economy and, therefore, tax revenues are growing at a much slower rate.  It is a very large number when, as is the case in Minooka CCSD 201, the equalized assessed valuation upon which property tax revenue based is dropping (the EAV of the district dropped almost 6% from 2009 to 2010 and nearly 10% from 2010 to 2011).  All the talk about our district's budget over the past three years has been about how we are projecting sustained and growing deficits as far as the eye can see (remember deficits, debt and insolvency are not the same thing, but deficits over a sustained period of time certainly create debt and insolvency once your cash balances are depleted).  In addition, as we will see in the near future, even these projections do not present an accurate picture since the assumptions of stable or growing EAV upon which they are based are already proving to be seriously flawed.  As many of you are aware, over the course of the past few years, our school district has instituted many deficit reduction measures from saving money on our health insurance costs, increasing our student registration fees, and, unfortunately, reducing teaching and support staff positions.  And, based on the budget realities going forward, there will be many more such hard decisions to come.  But, the taxpayers and parents of Minooka CCSD 201 can rest assured that the district has taken care of its superintendent both now and in retirement (see previous post).