Dive Brief:
- School districts outside of Chicago are losing at least $59 million of their federal Title I allocation because of a state requirement to contribute a large chunk of the money to the highly underfunded state teacher pension system.
- The Journal Star reports districts have to contribute 38% of teacher salaries funded with federal dollars into the pension system, compared to just 18% of salaries if they’re funded with state and local dollars – and that could go up to 45% in July if a proposed law gets rejected.
- Some districts have gotten around the surcharge by using Title I funds to buy materials or hire non-certified staff who aren’t covered by the Teacher Retirement System, but administrators say that can limit the impact of the federal funding.
Dive Insight:
Illinois has one of the most troubled pension systems in the country and the Teacher Retirement System is the largest pension system in the state. Elected officials, instead of making systemic changes to the state’s finances during tough budget years, voted to skip pension payments, creating a debt load of more than $100 billion. Teachers hired after 2011 are considered “Tier II” employees and they actually lose money on their pension contributions until their third decade of teaching. Few teachers stay in the system that long.
The state’s self-inflicted pension problems do not create a valid excuse to co-opt federal funds to offset debt, however. Students who had no role in creating the financial mess are the ones who lose the most when they can’t get the additional supports Title I aims to provide.
