HR0876 98TH GENERAL ASSEMBLY

HR0876 LRB098 20426 RPS 56221 r

HOUSE RESOLUTION

WHEREAS, Illinois' continuing budget crisis and slow economic recovery has motivated discussion on how to save the State money, including a misguided proposal to shift the State's funding of the normal pension cost for the State Universities Retirement System and the Teachers' Retirement System to local entities, such as school districts and community colleges, and to public universities; and

WHEREAS, Decades of the State's chronic mismanagement of funds and failure to adequately fund its five pension systems has resulted in a ballooning pension payment that has been crowding out funding to critical State programs and services for education, human services, and public safety; and

WHEREAS, The FY14 projected normal cost, calculated by the Commission on Government Forecasting and Accountability, for the State Universities Retirement System will be $680.9 million and for the Teachers' Retirement System will be $1.792 billion; and

WHEREAS, If these costs were combined they would represent a pension liability shift from the State to local governments of $2.473 billion for FY14 alone; and

WHEREAS, Illinois already has one of the largest residential property tax burdens in the nation; and

WHEREAS, The consideration of a State cost shift of this magnitude, particularly when it is combined with the Property Tax Extension Limitation Law, will dramatically impact a school district's and community college's ability to allocate funds to pay for the normal cost of pensions; and

WHEREAS, 39 of the 102 counties, which represents 53% of the State's total school districts, are subject to the Property Tax Extension Limitation Law, which hinders the ability of a school district and community college to increase revenues to accommodate a significant cost shift of State obligations to local budgets; and

WHEREAS, The proposed cost shift would force significant local budget reductions, which means teacher layoffs and reductions in curricular offerings; and

WHEREAS, Over 60% of Illinois' public school districts are operating under deficit spending and only 20% have more than 100 days of reserve cash on hand; and

WHEREAS, High property tax burdens in combination with the pervasiveness of school district financial instability, the unpredictability in State funds directed towards education, and a whole host of statutorily required unfunded mandates have made it especially hard for local school districts to operate effectively; and

WHEREAS, It is anticipated that the cost shift for the State Universities Retirement System will force community colleges and universities to raise tuition in order to cover the increased costs; and

WHEREAS, In the case of institutions of higher education, every 1% of the normal cost shifted will require an additional 2% increase in tuition; and

WHEREAS, Institutions of higher education have already been raising tuition steadily to cover the static or reduced funding level from the State, most notably in the case of the University of Illinois, which has already raised tuition by 112% in the last 10 years; and

WHEREAS, The unpredictable nature of pension costs makes it difficult to provide an accurate account of the total impact of a cost shift to local taxing districts, and it is even more difficult to ask a school district or institution of higher education to plan for these unknown factors over time; and

WHEREAS, The concept of shifting additional financial burdens onto the State's already cash-strapped school districts and institutions of higher education would ultimately raise property taxes and increase tuition; and

WHEREAS, It is unfair and reckless to transfer an already well-established State financial responsibility onto local taxing districts, especially during this time of financial uncertainty; therefore, be it

RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE NINETY-EIGHTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that the normal cost of pensions for our State educators is the responsibility of the State; and be it further

RESOLVED, That that the General Assembly should not use the current budget crisis as a reason to shift its financial responsibility for State pension costs to the local taxpayers.