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Every
adult in Illinois is on the hook for $4,000 in retired teacher health care
costs, according to a new study showing the state has no money saved to pay for
the growing cost of its promises.
The
report released Tuesday by Bellwether Education Partners estimates that
Illinois owes $54 billion in future health care costs that have been promised
to teachers after retirement. That’s the sixth-most of any state when divvied
up by each state’s adult population. This is not included in the estimated $130
billion in unfunded teacher pension liabilities.
Thirty-five
states offer post-employment health coverage to teachers, of which Illinois is
one, according to the report.
“For
too long, employers were able to promote the benefits without recognizing their
long-term costs,” the report said. “That reckoning is coming, and there are
better and worse ways to tackle it.”
Chad
Aldeman, principal at Bellwether, said the growing bills from health care could
edge out dollars intended for the classroom.
“Less
money is going to current services like schools or teachers that are in the
classroom right now,” he said, adding that the costs are bound to grow as
retirees live longer and health care costs increase.
The
growing cost will have to be paid for by either cuts to retiree
benefits, tax hikes, or a combination of both, Aldeman said.
Health
care benefits, like pension payments, are a promise made by the state and local
school districts but, unlike pensions, the benefits aren’t protected from
diminishment by Illinois’ constitution.
States
should put qualified retirees into health care exchanges, the report said, and
rescind coverage of retirees making more than a certain amount.
“The
state is providing retiree benefits even to a retired superintendent who’s
making $150,000 or $200,000 a year in a pension and they get free healthcare on
top of that,” Aldeman said. “That may not be a good use of public
dollars.”
