Time to Retire Teacher Pensions in Illinois and Michigan?

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Controversy is brewing in Illinois over some hefty teacher pensions.

More than 1,100 retired Illinois teachers receive yearly pensions of $100,000 or more, according to Illinois teacher pension sleuth, Bill Zettler. Included in the premium pension club is the highest paid teacher of the year from 2004--a driver's ed teacher who now receives an annual pension of $103,000.

The Teacher Retirement System argues that these figures represent only one percent of teacher retirees currently receiving their pensions. The average retired teacher in Illinois receives a $38,076 pension.

Still, the money adds up. Zettler points out that a $40,000 annual pension requires an up front payment of $1 million from the state. Zettler began using FOIA requests to collect Illinois teacher pension stats after he started to question the way his local school district was spending money. Zettler's research, posted on the Foundation Champion website, has led him to call for a "limit on public pensions."

The shock value of these figures raises even more heat in Illinois, where the state was already under fire for diverting pension money to fund other state expenses and is currently looking for a miracle to refill pension coffers.

Zettler's six figure crackdown also emphasizes another hot topic in school reform: the recruitment and retention of top educators in high-need schools and subject areas. Whatever the pension size, current direct benefit pension plans are not meeting districts' most pressing needs. Instead, these funds provide a cushy exit for teachers who are on their way out of the system. Research shows these veterans are not necessarily more effective than their younger, less experienced colleagues and are most frequently employed in already higher performing schools.

In an age of mobility, where the best and the brightest professionals travel from one career to the next with 401(k)s in tote, the security offered by defined benefit plans has lost much of its allure. By freeing pension fund money and investing in teachers up front, districts could attract high-quality teachers and keep them in the classrooms where they are needed most.

Zettler may find more fuel for his crusade just across the water in Michigan--where employees are taking advantage of a loophole in the retirement system. Teachers and other public school employees who work for at least 10 years--and then go back to work and "retire" while in the system--are eligible to receive a pension and benefits package valued at $150,000. The glitch? You don't have to stick around once you put in your ten years. Come back at 60, work three weeks, and collect your due.

Take it from Paulette Strong, who returned to the system after a decade-long hiatus. All she had to do was work 102 hours in any position--teacher, bus driver, cafeteria help--take your pick. Shocked that the loophole existed, she inquired where she could actually find a position that required only 102 hours of work. School district officials provided an answer.

"They said, 'Don't worry, we'll find a way to get your 102 hours.'"

She worked as a school aide--enjoying her 102 hours all the way to the bank.