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GOVERNMENT RELATIONS


Alliance Legislative Report 97-56

Distributed via Email: June 22, 2012

TRS PENSION TALKS SLOWED

When, by adjournment of the legislature at the end of May there was no agreement on pension reform legislation, Governor Pat Quinn said that he would call legislators back to the Capitol this summer to address the issue. Legislative leaders and the Governor met on the issue earlier this month and again yesterday (Thursday), but little progress seems to have been made. Reportedly the discussion Thursday morphed into a more general conversation about school funding and it was determined that more data is needed before pension negotiations continue. The Governor has said that it could take at least five weeks to compile the needed information – we do not know exactly what type of data or information they are looking for – but it does not look like legislators will be returning to Springfield any time soon.

Budget Discussions

Legislative leaders are still working off of the pension proposal that would decrease the amount of the Cost of Living Adjustment (COLA) for both active employees and current annuitants of the Teachers’ Retirement System (TRS), and that would shift part of the costs of TRS from the state onto local school districts. Resistance to the cost shift, a proposal opposed by the Alliance, has been a major stumbling block for passage of pension reform.

Generally, proponents of the cost shift have stated that school districts could find the necessary funding to cover the new mandated pension contribution by “bargaining harder” to free up money that would no longer go towards teacher salaries or benefits. Proponents also say that if the state’s pension costs were under control, more funding would be available each year for the General State Aid formula.

One of the problems in assessing the cost shift is that no one really knows what it would cost school districts over time. For the first year, it is estimated that the “normal costs” of the pension system being shifted over to school districts would cost each district about 7.65% of the TRS payroll. That amount could increase over the next few years (as high as 12% by some accounts), and then could decrease in the out-years (to a level of around 3%). Again, no one can provide an accurate and realistic account of what these costs would be for the local school districts. This is a huge concern for school districts as they attempt to establish accurate budgeting and provide quality education.

School District Reserve Funds

Governor Quinn added to the cost shift debate earlier in the week when he released a report to the Chicago Sun-Times newspaper that stated that most school districts had surpluses and that the majority of school districts had plenty of money in reserves that could be used to make the new pension contribution.

The school district reserve fund information, however, was a snapshot in time, taken one year ago. It does not then take into consideration the spending by school districts over the past year when the districts had to dip into reserves to cover shortfalls resulting from the cut in education funding or the delayed payments owed to school districts. It does not take into consideration that some school districts have these funds earmarked for bond payments due later in the year or that the district is saving for school construction or rehabilitation projects. It does not take into consideration that most school districts are on a cash-based accounting system that must record cash on hand as it is received even though it is to be used for liabilities that are due later in the year that are not yet on the books. It does not take into account that many school districts had received the first installment of property tax receipts earlier in that month – funds that will be used to pay for the education program in the next fiscal year.

Further, school districts may have a budget reserve because the school board members have been prudent fiscal managers, watching closely and safeguarding taxpayer funds. A reserve that can be used in case the State of Illinois falls behind on its obligation to properly fund K-12 public education.

Information Could Be Needed

According to news reports, the Governor and the legislative leaders may soon be soliciting information from school districts to help answer some of these questions.   Though it is not known which data may be requested, some possibilities include:

  • What is the present amount of the school district’s current reserves?
  • When does the current school district’s collective bargaining agreement (CBA) with the teachers’ union expire?
  • Does the current CBA require the school district to pay any portion of the employee’s pension contribution?
  • If so, what amount of the employee’s pension contribution is paid by the school district?

The Alliance will continue to update school administrators and board members of any progress on the pension reform discussions.

ISBE ASKS FOR REMOVAL OF SCHOOL BOARD MEMBERS

In precedent-setting action, the Illinois State Board of Education (ISBE) voted Thursday to ask for the permanent removal of sitting, elected school board members. Though a provision in Illinois State statutes has for several years allowed for school board members to be removed for failure to make Adequate Yearly Progress (AYP) for an extended period of time, no such action has ever taken place or even been attempted.

The board unanimously approved authorization of the state superintendent to require the regional superintendent of schools to remove the East St. Louis #189 Board of Education.  This will then allow the state superintendent the power to appoint an independent authority to operate the district in order to improve student performance and enhance school improvement.  The district has not met AYP for the last eight years and this lack of academic performance gives ISBE the authority to remove the current seated board. The district is currently under a Financial Oversight Panel (FOP) for its financial difficulty. 

Likewise, the ISBE unanimously approved the same authorization for the regional office of education to remove the current seated members of the North Chicago #187 Board of Education.  That district has not met AYP for the last nine years and has just recently had an FOP assigned.

Finally, the ISBE unanimously approved the appointment of a reorganized FOP for Proviso Township High School #209.  This action will dissolve the current FOP terms, reappoint the current five FOP committee members and add two community members to the new FOP.  This action does not impact the current Proviso board of education. 

ISBE APPROVES CERTIFICATED SCHOOL NURSE ISSUE

On an 8-0 Consent Agenda vote on Thursday, the Illinois State Board of Education (ISBE) approved an amendment to the medical review rulemaking (Special Education, 23 Illinois Administrative Code 226.840) that will require schools to employ certificated school nurses after July 1, 2013 to make recommendations regarding educational interventions, accommodations, or modifications based upon medical review findings for students with Individualized Education Plans IEP) or 504 accommodation plans. The Alliance testified before the Board in opposition to the proposal.

Under the rulemaking procedure, the 45 day 2 nd Notice Period will begin today (June 22) for the Joint Committee on Administrative Rules (JCAR). JCAR will act on this proposed rule at its July 10, 2012 meeting scheduled in Chicago. The Joint Committee will not allow public comment at the meeting; however JCAR members will be reviewing all responses to the proposal on July 3, 2012. Please forward your comment to this amended rulemaking before July 3, 2012 to JCAR, 700 Stratton Building, Springfield, IL 62706 or via e-mail at jcar@ilga.gov

Here is the link to review the text of the rulemaking (scroll down to page 384)

http://www.isbe.net/board/meetings/2012/june/packet.pdf

This legislative report is written and edited by the lobbyists of the Illinois Association of School Boards to provide information to the members of the organizations that comprise the Statewide School Management Alliance.

Bill Text/Status: Illinois General Assembly www.ilga.gov


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