The Great Chicago Pension Caper is Underway
BY CTU COMMUNICATIONS | 02/10/2014
CHICAGO – The Chicago Teachers Union (CTU) vowed to stand firm in its defense of the retirement security of thousands of retired public school educators in the wake of new threats by Mayor Rahm Emanuel and his legislative allies to fire another 3,000 teachers and raise student class sizes. CTU Vice President Jesse Sharkey said instead of good faith bargaining, “that sounds like negotiations at the point of a gun.” A salvo launched today by Illinois Senator John J. Cullteron is the start of what could be “The Great Chicago Pension Caper.”
While speaking at the City Club of Chicago and upon the heels of a misleading commentary published in the Chicago Tribune, the Senate president acknowledged that Chicago Public Schools (CPS) must make a $613 million payment to the pension fund by June 30, yet failed to mention that the money has already been budgeted for 2014. He also ignores the fact that teachers do not receive social security. Pensions are not a gift they are the hard won earnings of employees who expect that money to be there when they retire.
Instead of calling on Mayor Emanuel to honor his legal obligation, Cullerton offers a guesstimate of future cuts based on a calculation that uses Senate Bill 1, the pension cutting bill passed by the Illinois General Assembly, as a template. The bill was passed last year to reduce the pension benefits for hundreds of thousands of workers in the state pension systems. When SB1 is used as a model for cuts, city workers and retirees in Chicago are likely to see their retirement incomes reduced by $400 million in five years. The CTU stands in opposition to that bill.
How is the firing of 3,000 more teachers good for children? Non-payment and underpayment into the fund created the problem. Pension issues in Illinois stem from revenues, not expenses. The district made no pension payments between 1995 and 2005 and then was granted relief from the General Assembly in the form of dramatically reduced payments. Their decisions will directly impact the Chicago Teachers’ Pension Fund with 30,000 active employees and 22,000 retirees.
“We’ve had cuts to the classrooms for the past three years,” said Sharkey. “On top of that we’ve already had thousands of teachers, clerks, teacher’s aides, security staff and other educational support personnel laid off. Any change now won’t reverse those layoffs. On top of that they shuttered 50 neighborhood schools and implemented other cost-saving strategies like student-based budgeting. This isn’t an issue of whether or not there is money for this but whether or not there is the will to fulfill their obligation. We’re not going to stand by and let them rip off retired public servants.”
Further, the district has imposed 9-figure cuts on teachers and other staff each year since 2010. Teachers and district staff have sacrificed. The district has not. Despite claims of “billion-dollar” deficits, CPS ended FY2011 and FY2012 with surpluses in excess of $300 million. CPS could have used some of those budget surpluses to smooth out their pension liability. Instead, CPS officials chose to delay action and faced a huge cliff this year.
Irony is not lost on CTU members that while the district and the Board of Education cry broke it has found tens of millions of dollars to spend on the expansion of charter operations, high-stakes standardized testing.
CTU spent significant resources and time to craft a solution that would stabilize both the pension fund, retiree healthcare, and the CPS operating budget. In fact, CPS and the mayor would not agree with any of CTU’s substantive plans. They pledged minimal guaranteed revenue and wanted cuts so deep that active and retired teachers would pay for the district’s entire normal cost, plus add $50 million to repay the district for payments it failed to make in previous years.
Though the mayor and his political pals would have the public believe the CTU has been unwilling to negotiate the truth illustrates the opposite. CTU proposed revenue solutions that would ensure a stable tax base that primarily targets corporations and those most able to pay, including closing corporate tax loopholes and ending corporate subsidies.
The CTU remains a good faith partner at the bargaining table but it will not negotiate alone nor at the “point of a gun.” Impacted municipal employees from throughout Chicago will take a massive caravan to Springfield on Feb. 19th to encourage legislators not to raid their benefits while their wealthy, corporate allies reap the financial benefits of their hard labor.