The Chicago Public School system has until June 30 to make a $634 million contribution to the Chicago Teachers Pension Fund.
But the city is pushing the pension fund to help out cash-strapped CPS by accepting a much smaller payment – potentially as low as $200 million.
There’s a lot at stake, including CPS’ bond rating and potential legal action.
From the Chicago Sun-Times:
Never before has [Chicago Public School system] either missed or reduced a pension payment the district wasn’t authorized to skip or cut by the Illinois General Assembly.
A partial payment this time around would be a dubious and dangerous first that could trigger a pension fund lawsuit and a further drop in a CPS bond rating that’s already been reduced to junk status.
But sources said top mayoral aides are arguing behind the scenes that desperate times require desperate measures.
[…]
A $200 million payment is all the system can afford without massive layoffs and classroom cuts, City Hall contends.
Charles Burbridge, executive director of the Chicago Teachers Pension Fund, is resisting any partial payment.
“The Chicago Teachers’ Pension Fund expects full payment from the Board of Education and has not been given specific direction otherwise. Full payments are crucial to the long-term viability of the fund. Beyond that we won’t speculate on events that are yet to occur,” Burbridge was quoted as saying in an emailed statement.
Emanuel’s office contends that if CPS makes the full contribution, schools will be forced to cut back classroom costs to the tune of $1600 per student.
The Chicago Teachers Pension Fund is 51 percent funded.
Photo by bitsorf via Flickr CC LIcense
If, on June 30, 2015, the Chicago Teachers Pension Fund accepts a CPS partial payment, it will a day that will live in infamy.
My husband is a retired member of the CTPF. When he was working as staff to the Illinois General Assembly, the unwritten golden rule was: “Keep anyone you are going to screw away from the bargaining table especially as deals leading to their demise are being hatched.” With this in mind, there are only 12 days remaining before retired members of the Chicago Teachers Pension Fund will be screwed if this proposal is agreed upon by the CTPF board.
For if the CTPF agrees to this travesty, they will be setting precedent that allowing CPS to make less than the full required pension payment complies with contract law. Needless to say, this can (and most probably will) be used at a later date by the Mayor/CPS board to make “partial” payments of even $1.00 a year until the fund’s assets vanish into bankruptcy.
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