Listen to education officials’ demands for more money and it’s easy to believe Illinois grossly underspends on K-12 education. A $7.2 billion funding lawsuit to double state contributions to classroom spending, a $40,000 minimum wage demand for teachers, and lawmakers’ rejection of limits to school district borrowing might bolster that impression.
But the truth is Illinois already spends a lot on education – more than any other state in the Midwest. It’s just that much of the money is going to all the wrong places.
At $14,180 per student, Illinois spends far more than its neighbors on education – 44 percent more on a per student basis than Kentucky and Indiana, 22 percent more than Michigan and 21 percent more than the national average.
Billions of dollars are being siphoned away from the state’s poorest districts by the state’s burgeoning education bureaucracy.
The problem arises when all those dollars are doled out.
Just look at the facts:
Illinois’ non-teaching staff has ballooned by 50 percent in the past two decades, while student enrollment has grown just 11 percent.
Illinois has more school districts than the nation’s four most efficient, big-population states (Florida, North Carolina, Virginia and Georgia) have, combined. That means thousands of excess administrative and non-teaching staff in Illinois.
Pension costs have grown so quickly they’ve devoured nearly 50 percent of the state’s contribution to downstate education in recent years. In 2017 alone, the state spent $11 billion on education for downstate districts – $5 billion of that went to pay for downstate teacher pension costs.
Illinois is spending billions on district offices, administrators and multi-million dollar pensions instead of providing more classroom funding. That isn’t fair to poor districts like Taylorville CUSD 3, which only spends $7,400 per student and is one the plaintiffs in the lawsuit.
Illinois’ high per-student spend shows why the state doesn’t need to hit up Illinoisans for more education money. Instead, the state just needs to redirect the money it already has to the places and students that need it most.
The education establishment knows there isn’t enough money to both preserve their system and fund Illinois’ neediest districts. But officials don’t want to give up the system they benefit from.
So, they mislead Illinoisans into thinking more money is the only solution. The $7.2 billion lawsuit is the most egregious example of that – it’s all about the self-preservation of Illinois’ education bureaucracy.
Here’s what the education establishment doesn’t want changed:
1. Growing bureaucratic bloat
The growth of non-teaching staff in Illinois has skyrocketed compared to the growth in the number of students being taught.
Between 1992 and 2015, school administrators and other non-teaching staff grew by nearly 50 percent in Illinois. In contrast, teachers grew just 20 percent and student enrollment grew just 11 percent.
The state would have 33,000 fewer staff today if Illinois administrative and non-teaching staff had simply grown at the same rate as student enrollment since 1992.
At an all-in cost of $60,000 per staff member, that’s some $2 billion annually that non-teaching staff takes away from classrooms today.
Some officials might defend the growth of non-teaching staff as a result of the development of integration, special education and social services in schools. However, Ben Scafidi of Kennesaw State University found the expansion of those programs – and a massive hiring boom – occurred from 1950 through the 1980’s, long before the more recent 1992-2015 surge in administrative hiring.
2. Expensive, duplicative district administrations
The growth of non-teaching staff has also resulted in bloated district administrations across the state.
Take the New Trier Township, for example, which has six different K-8 school districts that feed into it. Seven separate districts means lots of superintendents, assistant superintendents and other district staff – people that don’t work in schools.
In total, 136 district office administrators work across seven separate district offices. Many of their positions – from bookkeeping to technology to HR – are duplicative. They could be consolidated if New Trier became a unit district.
The area’s seven superintendents are among the highest paid in the state. Each receive compensation packages ranging from $210,000 to $360,000annually, according to the Illinois State Board of Education’s salary database.
District office staffs are expensive, too. In total, salaries in the seven districts average $92,000 and cost over $1,000 per student. And that doesn’t include pensions and other benefit costs. Career employees in district offices can expect average pensions worth $2 to $4 million.
Unlike the district’s salaries, those pensions are paid for by taxpayers across the state through their income taxes.
This type of excess is not just in areas like New Trier. Even less wealthy communities like Homewood-Flossmoor have overlapping districts and executive-style pay for its administrators. Overlapping districts are particularly common in Cook, the collar counties and some areas in southern Illinois.
3. Too many school districts
Illinois has 852 school districts, many of which are overlapping and duplicative.
By comparison, Florida has just 67 districts. North Carolina and Virginia have just 115 and 132 districts, respectively. Even California, with three times the number of students as Illinois, has just 160 more districts more than Illinois.
Illinois’ overall inefficiency is due to how its districts are organized.
Over a third of Illinois districts serve 600 students or less. (129 have fewer than 300 students.)
Nearly 45 percent of districts serve just one to two schools.
And over half the districts in Illinois are separate elementary and high school districts, rather than combined unit districts.
An extra layer of district bureaucracy in those districts is wasteful.
Illinois could cut its districts by 40 percent immediately if it were to combine its high school districts with their corresponding feeder elementary districts. Creating unit districts would cut the need for hundreds of excess administrators and free up hundreds of millions of education dollars annually for classrooms.
4. Pension benefits (unless they’re increased)
The Illinois Constitution says that pension benefits “shall not be diminished or impaired.” The Illinois Supreme Court has defended the clause even for benefits that have yet to be earned.
Given the one-sided nature of the clause, past Illinois lawmakers should have been extremely careful about giving away any new benefits. But they weren’t.
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. 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.
In total, 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).
Politicians have doled out all sorts of new benefits over the past few decades: compounding COLA increases, increased benefit formulas, early retirement options, sick leave accumulation and more. Some have been given away for free. Other benefits, when charged for, were grossly underpriced.
The Teachers Retirement System publishes the entire list of changes to the pension plan since 1915, including new sweeteners and bigger benefits. The “best of” since 1957 are included below. Watch for the continuous improvement in the COLA benefits, one of the more expensive benefits.
5. Multi-million dollar pension benefits
The education establishment has created a cushy bureaucracy that is now creating millionaires in retirement. That’s not an exaggeration.
There are more than 30,000 school employees – those covered by the Teachers’ Retirement System – who get over $100,000 in total compensation, according to ISBE’s 2016 salary database. For those who work a full career – and most of them do – they’ll take in lifetime pensions, beginning in their late 50s, of at least $3 million.
And latest figures show that the average career teacher who recently retired will have a starting pension of $75,000 and earn $2.4 million during his or her retirement.
The top 10 pensioners in TRS are on track to receive far more than that. They’re all former administrators who began collecting benefits in their 50’s. All of them can expect to collect more than $8 million over the course of their retirement.
6. A regressive pension payment system
The worst part about the above multimillion pensions is they’re extremely regressive. That’s because pensions in Illinois are funded with state income tax dollars. Since wealthier districts pay higher salaries and have bigger district infrastructures, they benefit far more than poor districts from the state’s pension payments.
That scheme works against the goal of ensuring that state support goes to districts most in need. As more money goes to the wealthier districts with the most expensive pensions, there are less classroom funds for the poorer districts across the state.
7. Additional, special perks for educators
Members of Illinois’ education system also receive perks that nobody in the private sector ever gets.
For example, Illinois teachers and administrators can accumulate unused, unpaid sick leave year after year. When they retire, they can apply up to two years of that accumulated leave to their years of service credit. That, in turn, boosts teachers’ starting pension benefits.
It’s essentially letting many teachers retire two years earlier than they could have without sick leave. And it will cost taxpayers upwards of $3.4 billion over the next thirty years just for teachers who are currently retired.
Salary spiking is another perk. School districts grant employees end-of-career salary hikes designed to boost their pension benefits.
Many districts across Illinois give out automatic, multi-year, 4 to 6 percent increases to teachers when they announce their retirement. Wilmette School District 39, for example, offers the followingend-of-career bump:
Those hikes boost a teacher final salary by more than 25 percent and increase an average career teacher’s total pension benefits by about $250,000 in total.
The FY 2019 budget includes a new provision that cuts the “allowed” amount of salary spiking to 3 percent a year from the previous max of 6 percent. Districts that provide raises higher than that have to pay a penalty to TRS. But that penalty does nothing to help taxpayers – ultimately, they’ll be the ones paying for it through their property taxes.
And in many districts, teachers pay nothing towards their own pensions as yet another perk. Teachers are supposed to pay 9 percent of their salary into the state retirement system. But nearly two-thirds of all school districts pay for, or “pick up,” some or all of their teachers’ required pension contribution as an additional benefit. That costs local taxpayers approximately $380 million annually.
Fixing education finance
In going after the state with their $7.2 billion lawsuit, the suing superintendents are actually going after the ordinary people of Illinois. The only way the state could possibly pay for that new spending is through massive tax hikes.
The net result: Illinoisans will be poorer while the education bureaucracy gets richer.
Rather than squeeze another $7.2 billion more out of Illinoisans, lawmakers should cut back on the bloated system already in place: Consolidate school districts, cut back on perks that nobody in the private sector gets, end the state’s dysfunctional payment of teacher pension costs, and move all new teachers to 401(k)-style retirement plans.
If lawmakers actually did all that, funding lawsuits and tax hikes would be entirely unnecessary. A bureaucratic rollback and pension reforms is what Illinois needs to return billions of dollars to the classrooms that need it.
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Other works by Ted Dabrowski and John Klingner on education finance:
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APPENDIX: Illinois already spends far more on education than its neighbors
Illinois spent more on education per student than any state in the Midwest in 2016, according to data from the U.S. Census Bureau.
That holds true when Illinois’ wealthiest districts – the Flat Grant (60) and Alternate districts (75) – are stripped out of the state’s average spending. Illinois 600 Foundation districts, on average, still spent more per student than both the national average and the average per-student spending in neighboring states in 2014.
When Illinois’ student population is broken down into quartiles based on the concentration of students in poverty, students in districts with the highest concentration of poverty received 13 percent more funding than those in the lowest poverty concentration.
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