Equitable Pension Funding

Equitable Pension Funding

Evidence-based funding (EBF) is transforming Illinois schools, but tremendous funding inequities still exist and the model falls nearly $7 billion short of full funding. The EBF law set a minimum goal of increasing the investment by $350 million each year. The legislature has come up with this payment except in FY19, but even at the rate of $350 million per year, reaching adequacy will elude Illinois for decades.

Finding those increases will be increasingly difficult as the contributions to state pension systems grow each year and come out of the budget off the top, regardless of whether the legislature even appropriates money for them. They need it. This is funding for pensions that are owed to our teachers for the vital services they have provided. But there is a disconnect – school districts hire their staff and set their salaries; they send their pension bill to the State to pay to the tab. Whether a school district is better off with greater local property wealth and higher teacher salaries – or less well-off and trying to stay afloat – the State pays the overwhelming majority of their teachers’ pension costs. This creates a startling equity gap: districts funded over 100% of adequacy receive $357 more per student than districts funded below 80% of adequacy.

Stand proposes a solution to dismantle the inequity of education pension funding called the Equity Boost. The Equity Boost builds upon EBF and provides stability for school districts that have been fearing a sudden pension cost shift.

The Equity Boost brings together two disparate systems – EBF and teacher pension funding – to maximize the formula’s potential to close equity gaps. It protects teacher pensions and directs more State dollars to the neediest districts. The proposal is cost neutral to Illinois in the short term, while saving $300 million in State funding in the long term by reducing the gap to full education funding.

We must keep the progress going and accelerate Illinois’ path to fully funding schools.

Learn more about the Equity Boost in Stand’s report, “Accelerating Equity: Integrating Teacher Pension Funding into Fair School Funding.”

Download the full report here

Download the fact sheet here

Download the Equity Boost Methodology here