(Illinois News Network) — 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.”
