Chicago unions organize to fight potential pension cuts

February 17, 2014

(Flickr/401K 2012)

Chicago’s most powerful public workers’ unions are banding together to fend off potential cuts to employee pensions. This effort comes as City Hall and Springfield struggle to dig Chicago out of its multi-billion-dollar pension crisis.

The coalition, announced Monday, is called We Are One Chicago. It brings together nine labor groups representing nearly 140,000 city workers, from cops to nurses to teachers.

Organizers say the goal is to humanize the people who might be affected by changes to public pension benefits, like those in the controversial pension law affecting state workers that was passed by state lawmakers in December and signed by Democratic Gov. Pat Quinn.

Chicago Mayor Rahm Emanuel’s administration has suggested that law might be a model for overhauling some of the city’s pensions, which together are underfunded by at least $27.5 billion.

The prospect of a slash in monthly retirement benefits ruffled public workers who spoke at a coalition press conference on Monday.

“I paid my money into the pension, and the employment contract was that I would receive a pension,” said firefighter Tom Ruane, who said he hopes to retire at the end of this year after 34 years on the job. “If they’re gonna break an employment contract, how about they start with the Skyway or the parking meters?”

Also on Monday, the Chicago Teachers Union released a report calling for higher or expanded taxes to pay help pay for city pension benefits, in order to avert benefit cuts that they contend violate the Illinois constitution.

The union’s “revenue solutions” include a graduated state income tax, rather than the current flat one; a city income tax that would encompass suburbanites who work in Chicago; closing corporate tax loopholes; and expanding the sales tax to include services as well as goods, while lowering the tax rate overall.

Chicago Teachers Union Vice President Jesse Sharkey dismissed notions that the state-level pension overhaul, now facing several legal challenges, could be a model for Chicago.

“That’s not a starting point we’re willing to accept. There needs to be some meaningful conversations about revenue,” Sharkey said.

A spokesman for Chicago Public Schools would not immediately comment for this story.

Coalition members are planning to rally in Springfield on Wednesday in hopes of persuading lawmakers not to trim city worker benefits. City Hall and CPS are both facing massive, state-mandated spikes in their required pension contributions this year, after decades of underfunding of their retirement systems.

Unless lawmakers heed Emanuel’s call to delay those increases, the city’s required contribution for police and fire pensions alone will jump by nearly $590 million this year. Chicago Public Schools, which has a separate budget but is still funded largely by property taxes, faces a roughly $400 million payment hike to its fund for Chicago teachers.

Emanuel, who as mayor also controls the CPS school board, has said the city simply cannot afford those payments, even though his administration has long known about the impending contribution spikes.

Illinois Senate President John Cullerton, D-Chicago, a close ally of Emanuel’s, has said the Chicago teachers will have to accept some benefit changes in order to avoid bigger class sizes and drastic layoffs. CPS has said an earlier version of the state-level pension reform bill, sometimes referred to as SB1, should be used for Chicago teachers’ pensions.

That version would have capped teachers’ pensionable salaries and required them to kick in more money toward their retirement benefits. It also would have revised annual benefit increases and raised retirement ages.

It is unclear exactly what kind of fix Emanuel or state lawmakers envision for the city’s other two troubled funds, for city laborers and white-collar workers. Mayoral aides have said one option could look similar to a recently-approved overhaul of Chicago Park District pensions.

In an emailed statement, Emanuel said the city must provide “financial security” for city workers, but did not offer any specifics.

“The resolution to this crisis must provide a secure retirement for them and retirees, while also looking out for taxpayers and homeowners in every neighborhood who struggle to make ends meet,” the statement reads. “We need a balanced approach to solve the biggest financial threat our city and school system have ever seen, and look forward to working on these solutions together."

Alex Keefe is a political reporter at WBEZ. You can follow him on Twitter and Google+.