After massive layoffs, CPS suggests teachers contribute more for their pensions

District wants Chicago teachers to be part of a statewide plan that includes greater employee contributions, salary caps for pensions, higher retirement ages, and revised cost of living adjustments.

July 20, 2013

(WBEZ/Bill Healy)

As layoffs hit 3,000 in Chicago Public Schools, the district and teachers union are at odds over what is causing the budget crisis and what to do about it.

Chicago’s school district says ballooning pension payments are driving the crunch. This school year, the district’s pension obligation triples, to $600 million—a cost to be paid for with money that would otherwise fund current education needs in schools.  The pension tab amounts to about 12 percent of the district’s total operating budget.

But condemning Friday’s layoffs as “outrageous,” Chicago Teachers Union vice-president Jesse Sharkey challenged the district’s narrative. 

“We resist the urge on the part of the administration of the city to blame teachers, and to blame our pensions for the crisis. Blaming retired teachers who make an average of $40,000 a year for their retirement, who get no social security, who never missed a payment—while the city itself didn’t put any money into the fund for 10 years, who have had a massive pension holiday for three years--we think that’s hypocrisy.”

Sharkey says months of pension talks between the two sides reveal only that the school district and teachers union differ fundamentally on a solution to the problem. He said the district favors cuts to teachers' benefits and the union wants the city to find more revenue--through TIF funds, a tax on financial transactions, or more fundamental income tax reform, including possibly an income tax on suburbanites who work in Chicago.

Late Friday, the district confirmed that it wants Chicago to be included in a state pension reform plan that calls for greater employee contributions, salary caps for pensions, higher retirement ages, and revised cost of living adjustments.

“What we’ve been advocating is for CPS to be included in state teacher pension reform in Senate Bill 1… that would treat all teachers in the state the same in terms of pensions and benefits,” said CPS spokeswoman Becky Carroll. “It would provide us systemic ongoing savings. And it would make our system more viable and sustainable.”

Senate Bill 1, backed this spring by Illinois House Speaker Michael Madigan, is considered dead legislatively, but lawmakers are working to revive provisions of the bill.

“Everything in Senate Bill 1, we support that,” said Carroll. “And we support expanding Senate Bill 1 to apply to the Chicago Teachers Pension Fund.”

Until now, most people have assumed that by “pension reform,” Chicago Public Schools meant permission from Springfield to defer its pension payments, or outright help in making those payments. In 2010 lawmakers gave the district a “holiday” that allowed it to skip $400 million worth of annual payments for three years. A similar provision was introduced this spring but did not pass.

Chicago teachers are the only ones in the state with their own pension fund. The school district shoulders pension costs that in the case of suburban and downstate districts are paid for by Illinois. Chicago teachers have generally preferred keeping the pension systems separate because Chicago’s pension fund has historically been better funded.

Sharkey says teachers have already shouldered enough of the district's economic challenges.

“We’ve been hit. In 2010 we’ve been hit by mass layoffs. In 2011 we were hit by both mass layoffs and a freeze. Last year there was a strike and we got a 20 percent longer day for a 3 percent increase in pay. And this year again, mass layoffs. So this is not a recent problem. Someone has got to deal with some of the structural issues here, and we say that goes back to funding public schools fairly.”

CPS spokeswoman Carroll said the union had proposed a “massive” property tax increase. She said that’s not reform. “That’s a way to pay.”