CPS Struggles to Pay Teacher Pensions

Chicago Public Schools are facing a major deficit after relying on Springfield to help pay the $676 million payment for teacher pensions due in June. With little word back from the capital, CPS is struggling to function under added financial stress.

The Chicago Sun-Times has more on the subject:

Summer school for 17,450 Chicago Public School students could be scaled back dramatically if the Illinois General Assembly adjourns its spring session without providing pension relief to the nearly bankrupt school system.

The doomsday plan may also require central office administrators and network staffers who normally work through the month of July to take pay cuts or unpaid days off.

“Because of the budget crisis driven by the state’s discriminatory funding, CPS is being forced to seriously contemplate difficult reductions to summer school,” CPS spokeswoman Emily Bittner was quoted as saying in an emailed statement in response to questions from the Chicago Sun-Times.

[…]

Mayor Rahm Emanuel signed off on a school budget that assumes $480 million in pension help from Springfield. CPS has managed to make it through the school year, only after borrowing $775 million at sky-high interest rates and making several rounds of painful budget cuts.

A school funding bill approved by the state Senate this week would provide roughly $375 million in additional help for CPS.

But, the bill Downstate Democratic state Sen. Andy Manar claims will “attack poverty in the classroom” faces an uncertain future, both in the House and, more importantly, with Republican Gov. Bruce Rauner.

At issue is the $676 million payment to the Chicago Teachers Pension Fund due on June 30.

CPS has no choice but to make that payment in full, whether or not Springfield rides to the rescue.

To do otherwise would probably mean losing future access to the credit markets and slipping dangerously further into junk bond status — possibly dragging the city’s bond rating down with it.

But, after making that payment in full, CPS will have just $24 million left in the bank. That’s enough to cover just 1.5 days of payroll.

Since property tax revenues won’t start rolling in until early to mid-August, that means CPS would essentially be forced to operate “bone-dry” through the month of July.

That’s why summer school and summer staffing are being targeted.

Furlough days and pay cuts could also be in store for the roughly 1,000 central and network office staffers who normally work through the month of July.

CPS’s pension payment is due by June 30.

 

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