Teacher pension ‘pickup’ costs boost burden on Illinois taxpayers
Illinois teachers are required to contribute 9% of their salary toward pensions, but many school districts “pick up” this cost – putting the pension burden on taxpayers.
Taxpayers are being forced to shoulder an extra expense in many school districts, and they may not even know it.
By law, teachers in Illinois must contribute 9% of their salaries toward their pensions with the Illinois Teachers’ Retirement System. But many school districts have chosen to pay part or all of the teacher’s required contribution as an additional employee benefit.
That means the teacher receives not only their full salary, but also an extra benefit: the 9% contribution covered on their behalf. In some school districts, this amount extends up to 10.4%, with the additional 1.4% covering the employee contribution to the Teacher Health Insurance Security fund.
This practice, known as a “pension pickup,” adds millions in hidden costs to an already unsustainable pension system, further straining local and state budgets.
Pension pickups are a legacy of contract negotiations going back decades. Initially a rare perk, they’ve become a standard practice. Today, the majority of Illinois school districts report covering some or all of their teachers’ pension contributions, according to data with the Illinois State Board of Education. Of the 886 districts with data available, 491 (55%) cover 9 to 10.4% of their teacher’s pension obligation, meaning these teachers make no contribution from their salary. Only 326 school districts (37%) do not implement this practice at all.
This arrangement worsens the financial disconnect that fuels Illinois’ pension crisis. One unit of government – school districts – negotiates and hands out the benefits, but a different unit – taxpayers statewide – ultimately shoulders the cost through higher pension payouts and state funding formulas.
Illinois’ unfunded pension liabilities already take up more of its gross domestic product than any other state’s. But the widespread use of pension pickups worsens the long-term liabilities of Illinois’ five already struggling state pension systems, which currently face an unfunded liability of more than $144 billion. TRS has $82.9 billion of that pension debt and only 46.3% of what it will need to keep pension promises made to teachers.
The practice is not sustainable. It pushes more of the pension burden onto taxpayers and continues to crowd out funding for essential services such as classroom instruction and student support.
Taxpayers already fund generous defined-benefit pensions for Illinois teachers. That should be enough. Employee contributions exist for a reason and the widespread practice of school districts forcing taxpayers to pick up an extra cost is unfair.
Illinois school districts should start phasing out these pension pickups and state lawmakers should pursue the constitutional and legislative reforms needed to end them, along with other exorbitant perks. Requiring employees to pay their rightful share would save taxpayers hundreds of millions of dollars and bring greater transparency to education spending. Until then, Illinois taxpayers will continue footing the bill for a hidden benefit they never agreed to – and cannot afford.
Want to know whether your local school district picks up teachers’ pension contributions?
Each year, the Illinois State Board of Education publishes the information. You can use our lookup tool here to see what your district is paying for the 2024-2025 school year based on the salary range they’ve reported. Or use the maps below to see how widespread the practice is in elementary and secondary school districts.
Chicago Public Schools uses its own pension system separate from TRS and stopped the pick-up practice for employees hired after 2017. It continues to pick up 7% of the pension payment for employees who were hired before that date. That cost will be $135 million for Chicago taxpayers in 2025.