We’ll start with an apology. While pension funding is deeply important both to the public servants who earn pensions and to the fiscal stability of Illinois, it’s not always the most thrilling topic to read about. So to cut to the chase: Illinois will never truly achieve equitable school funding unless it fixes teacher pension funding.

Chicago faces the most obvious and perhaps the most egregious inequity. For every $1 the state pays for non-Chicago public teacher pension current costs, it pays about $4 for legacy costs; that is, debt from years of inadequate payments. For every $1 the state pays for current Chicago Public Schools teacher pension costs, it pays almost nothing for legacy costs. Chicago taxpayers are on the hook for those legacy payments. That’s about $660 million this year.

And the pension-related school funding disparities do not stop with Chicago. Low-income school districts across Illinois face another serious, though more complicated, hurdle. The state pays employer pension costs for all of them, but for districts with more resources and higher salaries, those costs are a lot more than for lower-income schools. This has been a hidden inequity for as long as the pension system existed.

Across the state, that state subsidy for covering employer costs of teacher pensions averages $890 per student. But for the highest-funded school districts in the state, the cost to the state might be twice as much. In fact, the state spends more than $2,300 per pupil to subsidize teacher pension costs in the best-funded district in the state. As for the less fortunate school districts, some benefit less than $600 per student from the state picking up their employer pension costs.

It is exactly the opposite of how policymakers wanted our school funding system to work. Illinois still faces deep inequities in school funding, largely due to our continued overreliance on property taxes to fund education. Our state’s evidence-based funding formula strives to raise the floor for the schools hit hardest by those inequities. We have come a long way. When the formula first passed, 431 school districts had fewer than 70% of the resources they needed. Now, all but 48 school districts are funded above 70% of adequacy. It is an incredible feat.

But while the school funding system fights inequities, the pension funding structure exacerbates them. There is a groundswell of support for enhancing benefit levels for newer teachers, whose benefits cost far less than teachers who were hired before 2011. Without a corresponding change in who pays for those enhancements, a boost in pension benefits will drive deeper funding inequities, while leaving fewer available resources for evidence-based funding to close those gaps.

These inequities come with straightforward solutions. First, let the state treat Chicago Public Schools the same as every other school district and consolidate the Chicago Teachers’ Pension Fund with the statewide Teachers’ Retirement System. This would be good for reducing administrative costs and improving fund liquidity and investment returns, but more importantly it would level the playing field across school districts in Illinois. The state would take on unfunded liability costs for CPS, as it does for all other districts.

Second, start incorporating a district’s teacher pension costs — and the state’s pension contributions on behalf of that district — into evidence-based funding calculations. You cannot adequately fund a school district without paying the retirement costs of its educators, nor should you subsidize wealthier districts’ pension obligations at the expense of inadequately meeting the needs of poorer districts. With a more accurate assessment of the resources the state’s school districts have and need, new formula funds will flow in an even more focused and gap-closing way to reduce inequities in school funding across the state.

Illinois has built a good framework for fair school funding. But that structure remains undermined by a pension funding system that totally ignores it, benefits wealthier school districts more than poor ones and treats Chicago differently than everyone else. Fix the pension funding structure, and evidence-based funding will be better able to deliver on its promise.

John Cullerton was president of the Illinois Senate from 2009 to 2020. Conor Durkin provides public policy analysis about Chicago on Substack at A City That Works. Jessica Handy is executive director of Stand for Children Illinois, an education advocacy organization.

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https://www.chicagotribune.com/2026/02/06/opinion-illinois-teacher-pensions-school-funding/