Emanuel: Chicago Public Schools At “Breaking Point” As Deadline Nears for Pension Payment

The Chicago Public School system (CPS) is required to make a $634 million pension payment on June 30. But as CPS runs dangerously low on cash, Mayor Rahm Emanuel is pushing for the pension fund to accept a partial payment.

Emanuel is cautioning that the full payment would come at the expense of classrooms, and the teachers and children that occupy them.

From the Chicago Sun-Times:

Chicago Public School finances are “at the breaking point,” Mayor Rahm Emanuel said Monday, arguing the cash-strapped school district cannot afford to make a $634 million teacher pension payment due June 30 — at least not in full.

“If you make that pension payment in its completion, which has been done four years in a row for the first time in a long time … we could no longer make that payment and not have it impact the school building and the classroom,” the mayor said.

[…]

A partial payment would be a dubious and dangerous first that could trigger a pension fund lawsuit and a further drop in a CPS bond rating already reduced to junk status.

The “breaking point” in CPS finances were outlined in an audit by the accounting firm of Ernst & Young disclosed Sunday by the Chicago Sun-Times.

The audit concluded CPS will “run out of cash as early as this summer” and be unable to meet payroll, pension and debt payments without “third-party intervention.” School could open late, class sizes could skyrocket and sports could be eliminated.

If CPS does miss the payment, it would be the first time in history it did so without permission from lawmakers.

Photo by Pete Souza via Flickr CC License