July 16--New state employees who aren't thrilled with the less-generous pension plan in effect since January 2011 no doubt find this even harder to swallow: Gov. Bruce Rauner's hand-picked schools superintendent doesn't share their pain.
State Superintendent Tony Smith is enrolled in the same Tier II plan as other new hires, but taxpayers will make up the difference between that and the Tier I benefit that applied to his predecessor, the Tribune's Diane Rado reported last week.
Smith will get a cash stipend -- roughly $11,000 next year -- to offset the smaller contributions made toward his pension under the new plan.
The Illinois State Board of Education "decided to structure the contract so that the payment to Dr. Smith would be the same amount as if he were a Tier I employee," a spokesman said.
That doesn't sit well with Smith's fellow Tier II employees, and we don't blame them. It shouldn't sit well with taxpayers, either.
The message here is that the modest reductions shouldered by new employees are too much to ask of Rauner's schools chief. And if there's a workaround for Smith, there could be a workaround for anyone else singled out by the governor.
That's a curious position for Rauner, who has stressed "shared sacrifice" as the key to the state's financial survival. Illinois has an unfunded pension obligation of more than $100 billion, thanks to decades of overpromising and underfunding. The pension system currently eats up one of every four tax dollars.
Struggling to control those costs, state lawmakers passed a partial fix in 2010 that applies only to new hires. A broader law that would have modified the benefits of existing workers going forward was struck down by the Illinois Supreme Court in May.
Under the state constitution, pension benefits are a contractual agreement that cannot be "diminished or impaired," the court said.
So it's back to the drawing board on pension reform, with limited options. The public employee unions resisting those changes are sure to note Rauner's willingness to shield his schools superintendent from the consequences of the Tier II plan.
Employees enrolled in Tier II earn pensions based on a less lucrative formula than those in Tier I. Higher salaries mean higher pensions, but the Tier II formula includes a strict ceiling on the earnings used to calculate retirement benefits.
Smith's base salary for this year is $225,000. But his contributions to the Teachers Retirement System, or TRS, will be based on a capped salary of just under $112,000.
Smith's contract requires taxpayers to make both the "member" and "employer" contributions to his pension, a rant for another day. Because of the salary cap, the "member" share is about half what it would have been under Tier I. So the taxpayers will write him a check for the difference.
Because Tier II, a baby step in a desperately needed pension system overhaul, is too onerous for the governor's guy? We don't think so.
Moving new employees into a sustainable pension plan was a sound policy decision by the state. Rauner has no business creating exceptions for his chosen aides.
