Print Friendly, PDF & Email

Illinois’ regressive pension funding scheme: wealthiest school districts benefit most

By: Ted Dabrowski and John Klingner

Download a PDF of the report

Compare your local school district’s pension subsidy to others around the state,
click here: 
by amountalphabetically


Most Illinoisans don’t know Dr. Ray Lechner, the retiring Superintendent of Wilmette School District 39, but they should.

After all, Illinoisans have been contributing to his upcoming $6.6 million pension for years, even though he’s an employee of the Wilmette school district, not the state.

That’s how it works for all teachers and administrators in Illinois, whether it’s a superintendent from Lake Forest or a school counselor from Mt. Vernon – school districts pay the salaries while the state funds the pensions.

It’s this kind of arrangement, where one unit of government doles out the benefits while another one pays for them, which makes Illinois so dysfunctional.

It’s a scheme that allows districts to spend more money on salaries and perks than they otherwise would.

Wilmette SD 39, for example, can grant Lechner an annual compensation of more than $300,000 and give teachers automatic 5 percent raises for five years before retirement because its budget isn’t burdened by the resulting pension costs.

The current arrangement needs to end. It has destroyed accountability and driven up pension benefits, leading to higher property and income taxes on struggling Illinoisans.

And it’s regressive. The state funding of teacher pensions works against the goal of ensuring every school district receives an adequate amount of education funding. Wealthy districts – like those on the North Shore – benefit far more from the state’s pension payments than poor districts do.

And as pension costs eat up more and more of education funding, districts like East St. Louis and other property poor districts struggle to maintain adequate funding levels for education.

Illinois must shift the cost and the responsibility of teacher pensions to where they belong: school districts.

Unfortunately, a group of legislators led by Rep. David McSweeney (R-Barrington Hills) is blocking any cost shift to districts. McSweeney claims that a shift will lead to higher property taxes.

But, ironically, the current arrangement he clings to has already driven up – and continues to drive up – taxes in Illinois.

What’s wrong with the current system

Imagine a group of friends celebrating at a restaurant. It’s one of those dinners where the final bill is to be split evenly among everybody.

You can bet the cost of the celebration will run much higher than if each person had paid their own bill separately. That’s because everyone has an incentive to splurge on steak and beers if the bill is going to be split evenly. And if one person orders an expensive drink, you can be sure the others will follow suit.

Said another way, nobody wants to be the sucker ordering just a salad and tea. So the dinner becomes a free for all. And when the bill finally comes due, no one is individually accountable for the inflated cost.

That’s roughly how the Illinois pension system for teachers works today. There is no individual accountability for pension costs at the school district level. Instead, the current model is a shell game all Illinoisans are forced to finance.

Because the state pays for the collective pension costs that school districts create, every district can spend more than they otherwise would on their teachers’ pensionable salaries and benefits. And like the dinner party example above, that makes the collective pension bill much higher than if each district had to pay for its own costs.

The boosting of salaries and perks, and the willingness of politicians to overpromise pension benefits, has contributed to the wild growth of total benefits owed to teachers over the past several decades. As Wirepoints found in its recent report, pension benefits owed to teachers have grown 1,092 percent since 1987. That’s eight times more than Illinoisans’ household incomes (127 percent) and nearly ten times more than inflation (111 percent).

In 1987, total pension benefits owed to active teachers and retirees totaled just $9.9 billion. Today, that number has ballooned to $118.6 billion. That’s an increase of almost 9 percent each year for nearly 30 years.

Wealthier districts benefit the most from the current arrangement. They have higher paid employees and bigger education infrastructures, resulting in bigger pension costs. So when the state pays for each district’s pension costs, it’s the wealthiest districts that have the most to gain from not having to pay their own way.

Winners and losers

To see who’s winning and losing from the current pension funding scheme, look at the table below.

It shows the amount of income taxes the state doles out to the teacher pension fund on behalf of districts, measured on a per-student basis.

The scheme benefits the wealthiest school districts because they have the highest pensions. Districts like Rondout, Sunset Ridge and New Trier – all on the North Shore – benefit by more than $1,000 per student.

To compare your local school district’s pension subsidy to others around the state, see:

Districts sorted by amount of subsidy     Districts sorted alphabetically

In contrast, districts with less wealth and lower teacher pensions benefit much less. Districts like Central City, Crab Orchard and Bradford receive less than $300 in state pension support when measured on a per student basis.

As a result, Rondout, one of the wealthiest and highest spending school districts in the state, gets six times more, on a per student basis, than Bradford CUSD 1 does.

That’s not surprising. Not only is teacher and administrative pay much higher at Rondout, but it has far more teachers and administrators on a per student basis than Bradford. All those staffing differences create far higher compensation costs, resulting in a far larger per-student pension subsidy for Rondout.

The North Shore splurge

It’s easy to see why districts in Chicago’s suburbs benefit the most. Take the New Trier High School area for example, where Dr. Lechner is the superintendent of Wilmette SD 39, one of the high school’s elementary feeder districts.

New Trier has six different K-8 school districts that feed into it. And that means lots of superintendents, assistant superintendents, district employees and pensions.

The seven total superintendents are among the highest compensated school employees in the state. Each receive compensation packages ranging from $210,000 to $360,000 annually, according to the Illinois State Board of Education’s (ISBE) salary database.

That means those who end up working a full career in Illinois’ public schools will receive lifetime pension benefits of $5 to $9 million, depending on their final years of service and age at retirement.

Trisha Kocanda, the superintendent at Winnetka SD 36, is only 41. If she gets 2 percent raises every year she’ll be earning a pensionable salary of $390,000 by the time she’s 60. If she retires at that point, she’ll get about $9.6 million in pension benefits over the course of her retirement.

The top 15 retirees across the New Trier area already expect to receive $5 million to $8 million in pension benefits during their retirement. Dr. Lechner and his $6.6 million expected pension will join the list when he retires next year.

It’s not just the superintendent costs that matter. District office staffs are expensive, too. In total, New Trier area district staffers receive average salaries of $92,000 and cost over $1,000 per student. And that doesn’t include pensions and other benefit costs. For those staffers who become career employees, they can expect, on average, pensions in the $2 to $4 million range.

In total, 136 district office administrators work in the seven separate New Trier district offices. Many of those positions – from bookkeeping to technology to HR – are duplicative and can be consolidated.

But it’s teacher salaries that drive the bulk of the pension funding that the New Trier districts benefit from. Those districts spent an average of $90,900 in salaries per teacher in 2017. That’s 41 percent more than the statewide average of $64,500.

Those salaries translate directly to higher pension benefits. The average, recently-retired career teacher in Illinois – those with 30-plus years – can expect to collect $2.4 million in pension benefits. In contrast, a New Trier area career teacher will collect $3.5 million, based on member data from a 2018 FOIA request to TRS.

Downstate districts don’t have the wealth found on the North Shore and other well-off areas in the Chicago suburbs. They can’t support the same teacher salary base, costly administrations and district infrastructures. In fact, ISBE data shows about 90 percent of the unit districts in Illinois are located outside of Cook and the collar counties.

Less wealthy districts may still pay their teachers more than they would without the state’s pension subsidy, but they don’t have the local funding to push salaries – and therefore, pensions – to the same levels as their North Shore counterparts.


It’s important to acknowledge the contributions that residents in wealthy school districts make to Illinois education through the income taxes they pay. The zipcodes of the wealthy districts are where a majority of state income tax dollars come from – which in turn fund the bulk of the state’s general aid to education. Their tax dollars are supposed to ensure districts like East St. Louis, which have very limited property wealth, reach the state’s goal of adequate funding.

But the state’s scheme for funding teacher pensions runs at cross purposes with that goal. The state takes in income taxes contributed by all areas of the state, whether wealthy or not, and then sends much of those dollars right back to wealthy areas in the form of pension subsidies. And since nearly 50 percent of state’s total budget appropriations to education have gone to teacher pensions in recent years, those subsidies matter.

More state money going to pensions means less money for districts in need, everything else equal.

Why this matters

Shifting the cost of pensions to school districts is not a new proposal. Politicians from both sides of the aisle, including Gov. Bruce Rauner and House Speaker Mike Madigan, have supported the idea in the past. In fact, the governor recently proposed a pension cost shift in his latest budget.

Under his plan, the employer pension contributions for teachers would shift to local school districts over a four-year period. In total, about $1 billion in costs would gradually be shifted to local districts over the next few years. In other words, in the absence of any other reforms or pay freezes, each district’s payroll costs would rise by about 2.5 percent a year.

To be clear, the shift would only include the “normal” cost of pensions – the benefits generated by a teacher working one additional year. The state would retain the responsibility of paying down the billions in pension debt that accumulated over the past few decades.

But there are lawmakers like Rep. McSweeney, who oppose the shift. McSweeney warns that a shift will result in property tax hikes across the state. To that end, he’s gotten more than 60 legislators together to sign a resolution opposing any shift.

The fact that McSweeney approached the Illinois Education Association to garner support for his resolution should tell Illinoisans all they need to know.

The IEA likes the state’s subsidy of pensions because it hides the true cost of education from Illinoisans. And they love the oversized salaries, perks and benefits that come with that lack of transparency. They don’t care about the high property taxes Illinoisans’ have to pay to provide those benefits.

McSweeney’s got it all wrong. The current non-transparent arrangement is not only unfair, but it’s precisely what’s contributed to Illinoisans paying the highest property taxes in the nation and a new 32 percent income tax hike.

Here’s how the current system raises taxes on Illinoisans:

  • It allows districts to pay higher salaries than they otherwise would. The current scheme fuels excessive salaries because districts don’t bear the cost of the resulting pensions. Like in the dinner celebration example above, districts can end up spending far more than they would have had they borne their own costs.
  • It encourages districts to give out pension-boosting perks. Districts can hand out end-of-career salary spikes, unused sick leave benefits and masters bumps because, again, districts don’t bear the resulting pension costs.
  • It crowds out general state aid and drives up both income and property taxes. As pensions overwhelm the state’s total education budget, that leaves less general state aid for all school districts, everything else equal. With pensions consuming nearly 50 percent of state education appropriations, school districts have had to raise property taxes to make up the difference. And the state has hiked incomes taxes in large part to pay for skyrocketing pension costs.

The cost shift must be paired with many reforms

A cost-shift will end the dysfunction in education funding caused by the state’s subsidy of pensions. It will bring down pension costs over time by forcing districts to moderate the salaries and perks they provide. And it will end the regressive nature of the scheme.

But in the short term, can the cost shift lead to the property tax hikes McSweeney warned about?

Not if local residents reject them and demand lawmakers like McSweeney enact reforms.

With Illinoisans already paying the nation’s highest property taxes, they don’t owe their local governments another penny. In fact, local governments owe their residents sizable property tax relief.

Illinoisans have every right to reject tax hikes and demand reforms instead. Those reforms can offset not only any immediate costs of a shift, but they can also bring down local government costs to levels taxpayers can afford.

Illinoisans should demand their lawmakers:

Require teachers to pay their fair share toward their own pensions. Many school districts pay each teacher’s required pension contribution, called a “pick-up,” as a fringe benefit, costing school districts $380 million per year. As a result, teachers in over half of Illinois school districts pay nothing toward their own pensions. This reform alone will cover nearly 40 percent of the pension cost shift.

End pension-boosting perks like the accumulation of unused sick leave and the automatic four- to five-year salary bumps that many teachers get at the end of their careers. Strip those kinds of items from the collective bargaining process. Nobody in the private sector gets those kinds of perks.

Consolidate school district administrations, starting with combining all elementary and high school districts into unit districts. And to ensure costs don’t spike, block the merger of teacher contracts in the newly created districts.

Stop giving unions the right to strike whenever they don’t get their way. Illinois is the only state among its neighbors to enshrine a teachers union’s ability to strike. That gives the union too much power over the very people that pay for their services.

And of course, there are much bigger structural reforms, from amending the constitution to allowing for local bankruptcy to rolling out the university system’s 401(k)-style plan for new teachers, that are all needed to begin an end to Illinois’ pension crisis.

All of the above can result in lower property taxes for Illinoisans.

McSweeney knows that. He shouldn’t be standing with the Illinois Education Association and defending the non-transparent, tax-driving status quo. Instead, he should be leading the effort to pass many of the reforms, including the cost shift, that will bring Illinois property taxes down.

And if McSweeney is looking for support from the education bureaucracy itself, there are officials that realize Illinois needs to change.

Dr. Lechner is one such official.

Dr. Lechner supports district consolidation at New Trier. He believes New Trier should be merged into a single, 12,000-student unit district. He admits that the 3-percent COLA benefit is too generous relative to inflation. And he also supports the pension cost shift.

Which brings us all the way back to his retirement benefits. If Wilmette residents had to pay the true cost of his compensation, perhaps Dr. Lechner wouldn’t be getting $6.6 million in pension benefits.

Of course, Wilmette residents might still be willing to pay that much. But at least with the cost shift in place, all Illinoisans wouldn’t have to foot the bill.


Download a PDF of the report

Compare your local school district’s pension subsidy to others around the state,
click here: 
by amountalphabetically



Ted Dabrowski lives in Wilmette. His four children all attended SD 39 and had positive experiences.

This piece has nothing to do with Dr. Lechner’s performance as a superintendent. It’s only about state pension rules and the laws that dictate how they are paid for.

Dr. Lechner and other big pensioners should not be demonized for the size of their pensions and perks. If anyone deserves the blame, it’s our politicians. They are the ones who have doled out benefits far in excess of what Illinois residents can afford.

Leave a Reply

26 Comments on "Illinois’ regressive pension funding scheme: wealthiest school districts benefit most – Wirepoints Special Report"

newest oldest most voted
Notify of
Imagine a group of friends celebrating at a restaurant. It’s one of those dinners where the final bill is to be split evenly among everybody. At the top of your argument your logic is faulty, so all of the rest kind of goes out the window. You can’t split the final bill equally, i would not expect my aging grandmother or my younger children to foot any part of that bill, it would be the higher earning income adults that pay the greater share. That’s how they do it in my family, those of us doing well, pay more then our fair share of the meal, so… Read more »
Ted Dabrowski
Leslie, don’t be so quick to disagree. I think we are on the same side on this. Under current laws, the state subsidizes the pension costs of the richest districts most and the poorest least. For example, Rondout, not too far from us, gets the equivalent of $1,579 per student in state pension subsidies. That’s despite the fact that Roundout spends more than $30,000 yearly per kid. In contrast, poor Bradford, which only spends $8,000 per kid, gets a state pension subsidy of $261 per student. Bradford is the aging grandmother or young child in your example and yet Rondout gets six times the pension subsidy. Our… Read more »

In other words, she should read the article.

in other words, read the comment Mark, i was pretty clear that i stopped at the poor dinner analogy.

Very clear.

Ted, I am pretty up on some of the things you have published. You are leaving the part out that over all you want to decrease funding to public education, that is your big picture. You were a very strong advocate for Wilmette not extending its levy to meet the rising costs of education, because republican leadership has FAILED us. So not really buying you are all about equitable distribution of funds, not buying that at all.

Ted Dabrowski
Leslie, I am all for cleaning up the funding so the money goes to the classrooms and teachers. My argument is we spend way too much on 1) pensions (i.e. Lechner’s pension amount), 2) too many districts (that means more for bureaucrats and less for classrooms and teachers) and 3) executive pay – look at NT and feeder superintendent pay. I don’t want to see property taxes in Illinois continue to rise to where we lose our tax base. If we continue to lose people (Illinois is shrinking), protecting the status quo will mean the bloat will remain and poor districts will get hit more and more. I… Read more »

I have NO problem with these salaries or pensions, these administrators manage more staff, bigger budgets and oh by the way parents like you and i expect a REALLY good product. The reality is if they were in the for profit sector they would be making even more money for equivalent deliverables. If we want to attract the best and the brightest to meet society’s public education expectations, than this sounds about right to me. You should know Ted, you personally have sent many kids through the public school, both of our families have benefited from an excellent public education.

Ted Dabrowski
It seems I have become the progressive and you are now the conservative. I do have a problem when public funds – state income taxes – are paying for $5 to $9 million lifetime pensions for duplicative bureaucratic positions while some downstate schools (the equivalent of your aging grandmother) spend less than $8,000 a kid. The superintendents downstate don’t get anywhere near the kind of money Ray Lechner gets. And property taxes and income taxes go up everywhere as pensions eat up more and more of the budget. Even more, the state can’t pay its social services. And it can’t pay its bills. And Illinoisans already pay… Read more »

you lost me when you called yourself a progressive.

Ted Dabrowski

Ok, I take back the line… But you can still address my comments…I don’t see your concern for the other districts and other folks in the state that are getting squeezed out…I’m happy to hear your solutions.

You may have no problem with the pension amounts, but do you have any problem with how much it would cost to fund them adequately, instead of constantly growing the pension debt? About $12 or $13 billion. We put in $7 billion now. Total revenue now is only $38 billion. That’s just for the state pensions, not the 550 other pensions around the state. How do you propose we pay for that?

Illinois should move to a larger school system model like the east coast. Maryland has 7districts. Illinois had 1,700 districts when I left 2 decades ago. I came from Lamont consolidated school district. One school , a high school, with a superintendent making about 250k years ago. For one building. Then layer were the other administrators. Also the last 3 yrs. before retirement, they would goose a persons salary so when they retire, they would get 75% but of the inflated amount. It was a disaster waiting to happen. This was happening state wide. I feel like the state should claw back due to fraud.
instead we got the ridiculous convoluted school funding bill-which solves nothing and nobody can figure out. we are still stuck with a bazaar byzantine map of 840+ school districts, each cutting separate pension/pay deals with teachers & staff and asking the state to pick up the tab-no questions asked. and throwing in a bailout for chi when they can’t pay the bills. all in the name of equality? if your for progressive advocate for EQUALITY in education, then by logic, wouldn’t also have to be for equality in pension/pay for all teachers and staff state wide–one pay scale and pension deal for all involved. one gigantic school… Read more »
NB Chicago Consolidating School districts we can agree on. But ONE gigantic district you suggest? Reducing duplicity, establishing more simplicity with school redistricting, to preserve resources, absolutely a move to make. Now lets get started. Lets make one school distrIct to save allot. Right? Instead of your home property taxes going to fund your local school district, your prop taxes will fund the Statewide Dist. (being run btw by a Statewide administrator.) Local control of your property taxes for schools is gone. Harvey is mixed in with Wilmette you really OK with this, all for one? You OK throwing your lot in with CPS, and them with… Read more »
Advocate I don’t have any problem with consolidating school districts-I live in city so have not a clue what you mean by “losing local control of your property taxes”–who has control? currently, thanks to the madigan dems its next to impossible to consolidate any of the 7000+ units of gov. I was simply trying to say—“IF” your a 100% percent true philosophical progressive and you believe in the 100% b. sanders world then by logic you would have to be for 1 gigantic school district where all teachers & staff are paid and pensioned the same—Isn’t that you? didn’t say that was me. Instead we get the… Read more »

Opposition to consolidation is from those whose jobs would (and should) be eliminated. And of course their unions. And their union executives who are paid based on membership and dues. And politicians who value endorsements and contributions which help them keep their own jobs. It’s turtles all the way down to the clueless citizens who can’t or won’t vote their own economic self-interest.
However, journalists and history faculties will find fault with high-income citizens and their impoverished descendants will blame their elders.

What ever happened to Patty Hearst?


When we the people voted for Rauner and made him our governor 3 years ago we voted for our own economic self interests. didnt we?

When exactly are the citizens clueless or voting against thier own self interests?

When they re-elect people who have discretion to make laws — together with a 20+ year history of enacting laws that simultaneously enrich themselves and other public employees while bankrupting municipalities and the state itself. Rauner was elected in the belief that he’d TACKLE those problems. Meanwhile tax burdens are increasing while pension funds are decreasing. Citizens — whether they vote or not — face economic burdens to be shared among fewer residents, declining property values, etc. Those who vote tend to do so based on slogans or one-sided press coverage. Clueless could be moderated as uninformed which could be escalated as ignorant. You appear to be… Read more »

Thanks for the reply JAherzrent.

Is it ok I call ya JA? I mean no disrespect.

Communication when face to face, is far better than text. So much context gets lost in text. Sarcasim inflection etc.

Acknowledging and conceding my horrendously bad grammar, replaced with a slight beer slur, would be fun to raise a glass to Mark, and the info hub Wirepoints, and reasonable debate amongst learned beer lovers.

I especially enjoy reading your thoughts about past voter accountability ….while we prepare and engage and persuade with yet another looming election.


if you have a little German, then “Ja” is simply “yes” which signifies that I am happy to be called by JA and that I could have an affinity for beer.


An unfiltered bavarian wheat would be wunderbar. JA.

Lets be real clear. Funding Education from property taxes establishes rich districts and poor schools and middle districts just like our our own demography. Education is the ticket out of poverty we all can agree on this. Lets not exacerbate an existing disparity. Rising out of poverty through education just got harder. School funding in Illinois is derived primarily from local property taxes. A fact we can all agree on. This is already our existing school funding structure. Transferring pension burden from the state, to the local, would INCREASE the burden of educational funding upon the locals;Even more, than it currently does being property tax dependent. So… Read more »
Advocate: i completely agree, but it is even more dire than that, a property tax freeze would decimate ALL of the school districts. Since our friends Trump and Rauner have cut education funding across the board, schools completely rely on property taxes. Folks at Wirepoint just don’t value public education, they are trying to help billionaire tax dodgers like like Koch Brothers and Betsy DeVos privatize public education so they can personally profit from for profit charter schools. It has become a big business, look at Indiana, look at Michigan, that’s what it looks like when Pence and Devos have their way. Total fail. There is no… Read more »
Leslie, you may have noticed that people debate here honestly. Give it a try. Rauner hasn’t cut cut education funding, he increased it by $350 million per year for ten years — that part of the new funding bill is something he never opposed. Nor have I ever said a word that could even be misconstrued as opposition to quality public education. I do, however, believe in equality of choice, which to me means school vouchers for people who are less affluent. Here in our district we have the doe to choose between great public schools and great private schools. Most poorer people have no choice except… Read more »

That’s rich mark, “people debate here honestly”, they don’t even use their real names?!