All Press Items

February 26, 2014

CPS CEO Barbara Byrd-Bennett sounded the fiscal crisis alarm on Wednesday and made clear that the district would like the same pension changes applied to CPS teachers that the state imposed on other public employees.

Next year, CPS will owe the Chicago Teachers Pension Fund $696 million, which, following a pension “holiday,” is 83 percent more than the district was required to pay last year.
“In the absence of action from Springfield, this increase in pension costs will crowd out classroom spending, and we will see further cuts to school budgets,” she said.
Imposing the changes made to the state employee pension system on CPS would save the school district $250 million, Byrd-Bennett said.

The declaration that the district is in financial trouble is an annual ritual. This year, however, the alarm is louder because schools were hit hard with budget cuts last year—a point reiterated numerous times by parents at Wednesday’s School Board meeting.

Byrd-Bennett’s statement can be expected to kick off a prolonged fight both with the union and in the courts. The state public employee pension changes include reducing the amount of annual cost-of-living increases for both current retirees and future ones, as well as raising the retirement age for workers 45 years and younger. Also, some workers can now get out of their pension and participate in a 401(k)-style contribution plan.

Chicago Teachers Union President Karen Lewis said she has other ideas for how to reduce CPS’ teacher pension obligation, though she hasn’t detailed them publicly. “Please don’t take my mother’s or husband’s pension away,” Lewis told the board Wednesday.

Also, four lawsuits have been filed to stop the state pension changes.

These lawsuits could well be successful, said Amanda Kass, budget director and pension specialist for the Center on Tax and Budget Accountability.  She pointed to a recent supreme court ruling in Arizona to explain why. As in Illinois, Arizona’s pension obligation for public employees is spelled out in the state constitution, and Arizona’s Supreme Court recently ruled that cost-of-living increases are a protected benefit, she said.

It is unclear whether the district has alternative plans, should the Legislature fail to approve the changes for CPS teachers. Under the state constitution, changes to pensions for any public employee, state or local, can be made only by state lawmakers.

Source: Catalyst Chicago