Chicago Public Schools Makes $634 Million Pension Payment On Time

Just hours before the deadline, cash-strapped Chicago Public Schools (CPS) on Tuesday made its full $634 million pension payment to the city’s teacher pension fund.

The payment was possible, in part, because Mayor Emanuel authorized $1 billion in borrowing last week.

But CPS is now warning that steep budget cuts and layoffs will come as a result of the payment.

From the Chicago Sun-Times:

The cash-strapped CPS used a combination of borrowed money and a promise of cuts to cover the payment after a deal to delay the contribution failed to materialize in Springfield. Last week, Emanuel’s hand-picked school board authorized $1 billion in borrowing just in case state lawmakers didn’t come through on the delay bill.

“Springfield has failed to address Chicago Public Schools’ financial crisis, so today CPS made its 2015 pension payment by borrowing money,” interim CEO Jesse Ruiz said.

“As an immediate consequence of driving the district further into debt and our need to address the existing structural deficit — which is also driven by decades of pension neglect — CPS will make $200 million in cuts,” he said. “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.”

As many as 1,400 employees will be laid off beginning Wednesday, according to CPS.

It’s not clear how much of the payment was paid for by borrowing, and how much was paid straight out of the budget — that should become clearer later this week.

Photo by bitsorf via Flickr CC License