Making Money Sense Of The Chicago Teachers Tentative Agreement
Ever since the tentative agreement between Chicago Public Schools and the Chicago Teachers Union was announced last week, there have been a lot of numbers flying around as people try to ascertain the costs and savings of the contract.
CPS officials have been quiet about how they think the district fares, but they noted in a press release last week that they think the school district could save about $300 million over the course of the contract.
Chicago Teachers Union officials, however, have said the contract could cost the school district anywhere from $100 million to $300 million.
WBEZ did its own calculations and found that the savings would likely cancel out the costs, but there are some big unknowns that could dramatically change the outcome. Bobby Otter from the nonprofit Center on Budget and Tax Accountability reviewed the analysis and helped provide some calculations.
For CPS, the big savings come this year and last year because teachers did not and will not get cost of living raises. Teachers also will not get retroactive salary increases for experience and education--called steps and lanes raises--for last year.
The district also could stand to save money under the early retirement incentive program. Under this program, up to 1,500 teachers and 600 support staff would get a lump sum bonus if they take the buyout.
There are some upfront costs with paying out the bonuses and some long-term costs to the pension fund. But ultimately replacing the most expensive staff with less expensive staff--or not at all--would bring compounded savings.
The big costs to the district are cost of living raises in the last two years of the contract and salary increases based on experience and education in the last three years.
There are some important caveats to this analysis.
For starters, CPS officials had wanted teachers to pay 7 percent more of the employee contribution into their pensions. Currently teachers only contribute 2 percent. CPS could have saved as much as $150 million a year if teachers had agreed to pay the full 9 percent.
The tentative agreement has the district continuing this pension pickup for current teachers, but not for new hires.
If the failure to get the teachers to contribute the 7 percent pension pickup is counted as a cost, then CPS comes out behind by more than $150 million, even when salary raises to offset the pension pickup are factored in.
Because the pension pickup stayed status quo for current employees, WBEZ did not count it as a cost or a saving.
Another element that WBEZ did not factor in is teacher and staff layoffs over the past year or in the future. During the past year, while the contract was being negotiated, hundreds of teachers were laid off, which saves CPS money.
This current contract allows the district to continue with layoffs, but it gives teachers the right to fill vacancies or be put into a substitute pool and be paid for 10 months. That means that savings from any future laid-off teacher will be delayed.
Further, it is important to note that figuring out the financial implications of the tentative agreement is a dicey endeavor.
For example, officials can estimate that paying the early retirement bonus to 1,500 employees would cost about $50 million. But no one knows exactly which teachers will take the bonus or how many years of service they will be compensated.
What’s more, if not enough teachers and staff opt to take the incentive, the whole program is cancelled and all savings and costs dissipate.
Sarah Karp is an education reporter for WBEZ. You can follow her at @SSKedreporter.