Early retirement will be more of a bargaining issue in Dist. 300 talks

At the forefront of future contract talks in Du Quoin Community Unit District 300 and other school districts in Illinois will be early retirement and the cost of it for both the district and the teacher seeking it.

Gone is what was known as the old 5-Plus-5 early retirement program. At Thursday's Du Quoin Board of Education meeting, Du Quoin Education Association president Jean Ann Mathis spoke to the board regarding recent discussions with the administration regarding the new Early Retirement Option (ERO) law.

Instead of early retirement being taken for granted it is now an expensive bargaining issue and here's why.

Last summer, Illinois Governor Pat Quinn signed into law the amended and extended Early Retirement Option for retiring teachers. This legislation allows teachers to make a one-time payment and retire up to five years early without receiving a pension reduction.

How does this amended and extended bill affect teachers and the board?

If you're looking to retire and use ERO, it just got a lot more expensive. Instead of paying 11.5% of your annual salary per year to leave early, it has now gone up to 14.4%. For example, a teacher earning $70,000 retiring two years before full vesting of her pension (age 60 or 35 years of service) will pay $20,106 versus $16,100 for the privilege. The cost has also gone up for school districts to have this option - from 23.5% to 29.3%.

If you're still teaching and not looking to retire, there's not much change. You will still pay the same amount for the ERO program from your paycheck, 0.4% of your annual pay. If you don't end up using ERO when you retire, the amount you have paid throughout your career will be refunded to you.

This may have a knock-on effect in some districts:

Older teachers, while more experienced, cost districts more money in payroll expenses. If there are a number of teachers who are nearing retirement, it may be beneficial for the school district to encourage these members to use the ERO option. Having a teacher earning $70,000 and paying a one-time fee of $40,000 for them to leave early could be beneficial if a new teacher earning $40,000 replaces them.

New teachers could see a larger demand for their skills again, after many years of finding it hard to secure a job. With new teachers bringing down the payroll cost of a district, this will make periods of reduced revenue easier to navigate.