At eleventh hour, CPS makes huge pension payment
UPDATED July 1, 7:53 a.m.
The head of the Chicago Teachers Pension Fund says Chicago Public Schools deposited the full $634 million into the pension fund Tuesday evening.
“The need for long-term solutions is not erased with this payment,” CTPF’s executive director Charles Burbridge said in a statement.
But with that payment, according to CPS officials, comes more borrowing and 1,400 layoffs of school district employees.
Illinois’ powerful House Speaker Michael Madigan said Tuesday the cash-strapped Chicago Public Schools would pay the hundreds of millions of dollars that it owes to teacher pensions by the end of the day.
The surprise announcement came after CPS had been asking state lawmakers for a short-term reprieve from the massive $634 million payment. Last week, the House of Representatives voted down the district’s proposal, even though it had a minority Republican support. At the time, Madigan denied he singularly defeated the proposal, even though he wields influence over many lawmakers.
On Tuesday, he said that debate was moot, as he’d been told by “reliable sources” that Chicago Public Schools would make the payment, in full.
“I’ve been advised by reliable sources they have cash on hand and they’ll be in a position to make a payment by the end of the business day today,” Madigan told reporters.
As for how the district can make this payment to its pension system and still afford bills in the near-term, Madigan said he doesn’t know how that math will work.
“There are open questions going forward in terms of paying the bills at the Chicago Board of Education,” he said.
In a statement, interim schools CEO Jesse Ruiz criticized Springfield for failing “to address Chicago Public Schools’ financial crisis.” Ruiz said CPS was able to make its 2015 pension payment by borrowing money, but they’ll also have to make an additional $200 million in cuts. CPS officials said 1,400 jobs - not just teachers - would be impacted Wednesday.
“As we have said, CPS could not make the payment and keep cuts away from the classroom, so while school will start on time, our classrooms will be impacted,” Ruiz said.
City Hall sources said late Tuesday night that Mayor Rahm Emanuel and Jesse Ruiz would be presenting a “comprehensive plan that includes long-term solutions to the district’s pension and funding inequities” on Wednesday.
Earlier in the day, Mayor Rahm Emanuel gave no indications to reporters in Chicago that CPS was in fact planning to pay the bill in full by the end of the day. However, he did address the impact of the pension payment on the school system’s budget.
“School will start, but our ability to hold the impact of finances away from the classroom, that’s gonna change,” Emanuel said.
Meanwhile, Springfield lawmakers are set to hear Wednesday about a new proposal that could funnel hundreds of millions of state funds toward CPS pensions.