Chicago Public Schools new pension headache

June 4, 2013

After Illinois lawmakers rejected a plan for Chicago Public Schools to delay pension payments, the District’s budget problems may have gone from bad to worse.

Three years ago, the Illinois state legislature gave Chicago Public Schools what critics called a ‘pension holiday,’ where the district could reduce payments owed to its retirement system. That’s set to expire at the end of June, meaning Chicago’s schools will have to make room for an extra $400 million in its budget to pay for teachers’ pensions.

CPS could have avoided writing that check by getting Illinois lawmakers to give them a longer timetable that would gradually increase pension payments over the next several years. This fiscal year, Chicago Public Schools is paying about $200 million toward its pensions. If Springfield takes no action, that number would jump to $600 million next year for pensions. The school system’s budget is a little more than $5 billion.

“We’re looking at how this will affect us,” said Kelly Quinn on Monday, a spokeswoman for Chicago Public Schools.

Quinn wouldn’t say if the school system is looking at layoffs, cuts to programs or a tax increase to pay for the $400 million if lawmakers don’t return to Springfield and agree to a plan.

On Friday, the majority of state representatives voted against a bill that would’ve given Chicago Public Schools some of the relief from pension payments that it was seeking.

“This is by far the worst bill of this session,” said State Rep. David McSweeney, R-Cary, during the floor debate. Many House Republicans said the state is in no position to allow another government agency to skip pension payments, considering Illinois’ pension problems.

The proposal lawmakers rejected would’ve allowed Chicago Public Schools to pay $350 million to its pensions in its next fiscal year, then $500 million the year after that.

“Sometimes we have to make some very difficult decisions,” said State Rep. Elaine Nekritz, D-Buffalo Grove, who sponsored the legislation. “I keep saying we have to make decisions between bad and worse and I think in this instance we have to pick bad.”

Laurence Msall, with the fiscal watchdog group The Civic Federation, said Illinois lawmakers never should’ve allowed CPS to not make pension payments in the first place.

“They’re going to have to do significant cutting,” Msall said. “They’re going to have to reduce their personnel. They’re going to have to make very difficult decisions.”

Complicating matters is Illinois’ own pension payment problems. On Friday, Gov. Pat Quinn released a statement saying he wouldn’t sign the bill giving Chicago Public Schools its pension ramp, unless lawmakers also approved a pension reform bill that affected state employees.

Tony Arnold covers Illinois politics for WBEZ. Follow him @tonyjarnold.