Illinois Retired Teachers Association s1

Illinois Retired Teachers’ Association Issue Overviews:

Healthcare for Retired Teachers: Many retired teachers in Illinois prepaid through active employee contributions to be able to receive a partial subsidy of their healthcare in retirement. This healthcare is provided through the Teachers Retirement Insurance Program (TRIP), and unlike retiree health insurance for state employees, the vast majority of the cost is paid for by retirees, active teachers and school districts.

 Retired teachers receive a subsidy between 50% and 75% of their premiums

 As active teachers, they and their local employers prepaid much of the cost of healthcare

 Many teachers were kept out of Medicare by the State, and now many teachers rely on TRIP as their only healthcare option

 TRIP costs the state about $90 million per year, which is much less than healthcare for other public employees for the state and universities.

 Many older teachers were not allowed to participate in Medicare by the State of Illinois.

Pensions for Retired Teachers: Teachers receive a retirement annuity from the Illinois Teachers’ Retirement System based on their salary when they retire and the years of work they have performed. Typically, teachers receive estimates years before they retire, and plan their retirement according to their projected benefits. Unlike what is sometimes reported, most teachers work years, often more than 10 years, after they can first retire to make sure they will be able to maintain their retirement security. Unlike in the private sector, TRS is the sole source of retirement income for many teachers.

 Retired Teachers are not allowed to participate in Social Security by the State of Illinois.

 Teachers receive an average of just over $48,000 per year in benefits from TRS, for an average of 28 years of service. The average teacher is 70 years old.  The benefits that retirees receive are based on calculations such as final salary, years worked, a multiplier amount and a cost of living adjustment, and these benefit levels are all consistent with other states that do not receive Social Security.

 Under projections done by the Illinois Teachers Retirement System, current law provides a COLA which comes close to keeping up with inflation, but whose value erodes by almost 10% over time. Many reform proposals erode that benefit by nearly 50% over time. In other words, a teacher would be able to afford half of her quality of life in later years of retirement.

Cost for Retired Teachers: The vast majority of retiree costs the state faces today are a result of poor fiscal management in years past. The ongoing costs of healthcare and retirement security are not the issue, and policy experts agree that the state could afford these costs if not for the legacy costs associated with the past 75 years. However the State progresses, it cannot afford to defer these contributions any further, and must pay this debt each year. The State acts as the employer for teachers in Illinois. This is really just a subsidy to local school districts, who would have to make payments for retirement and healthcare if the State did not. For years, school districts did not contribute for Medicare, but now, school districts do make some payments for healthcare in retirement. School districts do not have to make payments for Social Security. If retirement benefits for teachers are not kept at a certain level established by the federal government, school districts would be required to pay nearly $700 million per year in Social Security costs, sending nearly $1.5 billion in teacher and taxpayer money out of Illinois.

Economic Impact of TRS: According to the TRS, benefits paid in Illinois have a huge economic impact. For instance, the total economic impact of the TRS benefits is $4.432 billion, more than $500 million more than the value of exports to China. This impact creates about 32,000 jobs in the state who in turn make about $1.22 billion in salaries. The total Gross Domestic Product is increased by $2.544 billion for the State.

This report can be found at the TRS website, and includes district specific information: http://www.trs.illinois.gov/pubs/pub09.pdf Protect Illinois by Protecting its Promise to Retired Educators