Election Day is Tuesday and many people will likely get out and vote this weekend. So it seems like a good time to remind Chicago Unheard readers of the history behind the CPS teacher pension crisis and the role two current mayoral candidates had in what happened: Paul Vallas and Gery Chico.
In his response to a Sun-Times candidate questionnaire, Chico noted that when he left the Chicago Board of Education, the teachers’ pensions were funded at 92 percent. What Chico didn’t say was that in 1995 state lawmakers gave his boss, Mayor Richard M. Daley, much more freedom over how to spend property tax funds for schools. The lawmakers’ shift to mayoral control included combining a number of property tax levies–including one earmarked specifically for teacher pensions–into one general fund that could be used to meet current expenses.
Without that change, CPS would have been on the hook to contribute $93 million to teacher pensions in 1995. But thanks to the change, they only kicked in $10 million. This was the beginning of a “pension holiday” (legally permitted underfunding of the teachers’ pensions) that lasted a decade.
As part of the same deal, Springfield was expected to give the Chicago Teachers Pension Fund somewhere between 20 and 30 percent of what it contributed to the state pension fund. According to Chicago Magazine, they made their goal that first year, but slacked off thereafter.
The late 90s booming stock market kept the funded ratio high through the Chico and Vallas years, but by 2004, the party was over and the ratio fell below 90 percent, at which point the district began contributing again. (Until the Great Recession hit, when state law gave them another break, lowering the amount they had to pay.) As of last January, according to WTTW, the Chicago Teachers Pension Fund was carrying a $9 billion unfunded liability and was funded at a ratio between 50 and 55 percent.
Way back last May, before Mayor Rahm Emanuel dropped out of the race, he and Vallas traded barbs about whose fault it was that the teacher pension and CPS finances had taken such a hit. As PolitiFact put it, “Vallas and Daley edged the teachers’ pension fund toward a fiscal cliff ahead of two recessions.” Let’s not forget Gery Chico was there, too.