Fixing the TRS Federal Funds Rate

The Problem:

For years, Illinois has treated its poorest schools like piggy banks, raiding federal funds meant for the classroom to pay down a mountain of pension debt. The practice of tapping federal funds through the federal funds rate hurts our state’s poorest schools the most.

The TRS surcharge is the special rate school districts outside of Chicago must pay when using federal funds to pay teachers (Chicago has to pay its own pensions, which is a problem in itself, but for our purposes – this issue isn’t relevant for CPS.). Those federal funds are meant to support underserved students, but when a district spends those funds to hire certified teachers, the State takes 39% of those funds to pay off the pension debt of the Teachers Retirement System. Next fiscal year, that percentage will climb to an eye-popping 45%.

Poor school districts face two truly awful choices: relinquish to the pension fund close to half of every federal dollar they receive, or spend federal funds on materials, which may not have the greatest impact on student learning. This is a travesty.

The Solution:

Recently, the Illinois House and Senate passed HB656 unanimously, a bill that would fix the TRS federal funds rate and allow crucial federal funding to have the most impact on student learning.

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