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How would you like to make $7.1 million on an investment of only $358,000? This is the case for Audrey Haugan, retiring principal at Maine West High School in Des Plaines, Illinois. Haugan paid just $358,000 into the Teacher Retirement System (TRS) during her 33 years of employment in Illinois public schools. She retired on June 30, 2018 with a final year salary of $162,856.
Under TRS rules, retiree’s first year compensation is 75 percent of the average of the four highest years of compensation after working 35 years. Each year hence they receive a three percent compounding increase. This means in three years Haugan will have received just over $377,000. She will have recouped everything she paid into the system over her 33 years of employment. Maine Township District 207 paid for two additional years of service for Haugan to ensure she received a max pension.
According to calculations by North Cook News, at age 65 Haugan will be paid an annual salary higher than she made while working. Over her expected lifetime, she will be paid more than $7.1 million.
Haugan provides just one example of why the Illinois pension system is unsustainable. With almost 20,000 education workers currently making over $100,000, this problem is going to get much worse in the coming years. With an unfunded pension liability over $250 billion, a financial reckoning is fast approaching.