Corporate media aiding and abetting attack on teacher pensions... Pension Law to Hit CPS Teachers Hard

The two major daily newspapers are hailing the Illinois legislature's recent lightening speed vote to create a two-tier pension system as a move that will help fix the state's budget deficit.

The bill that the Governor plans to sign into law will do nothing to reduce the state's budget woes today, but is estimated to save $150 billion over 35 years, according to the Sun Times.

What it spells for state unionized workers including the teachers is a disaster - increase the retirement age from 62 to 67 and drastically lower pension benefits for newly hired workers.

While state officials maintain that the current measure will not affect teachers and other government employees paying into the definted benefit pension system today, it may undermine the unions' ability to show solidarity in a future work action where younger workers are not sure they should support older members who are much better compensated.

The incredible speed with which this bill flew through the House and Senate could be a testament to the Shock Doctrine Naomi Kline wrote about in her book in which the current state financial crisis has allowed legislators the excuse to reduce worker benefits, a hugely unpopular measure which would have been fought tooth and nail in "normal" conditions.

Even the Chicago Teachers Union and Illinois Federation of Teachers seemed to be taken off guard when they put out last minute pleas to their members to tell the governor to not sign the bill. Their letter stated the following:

"Senate Bill 1946 allows the Chicago Board of Education to undercut the Chicago Teachers Pension Fund, one of the most financially sound of all public pension funds in the nation. How can this be viewed as even remotely sound fiscal policy or pension reform? I urge you to act on the side of fiscal responsibility and veto Senate Bill 1946. To do otherwise is to cause the Board of Education to incur an additional debt of more that $12.8 billion by 2059, the new deadline for its statutory fulfillment of its pension obligations. Even with that new debt, however, the delay in payments means that a very well-funded pension system will be placed in a devastating financial position. If that were to happen, Illinois would have yet another underfunded pension system to add to those already in place. Please veto Senate Bill 1946."

The attack on employee pensions has been in high gear for a long time as other state and corporate employees - including most recently the auto workers in Detroit - have seen their pension benefits raided and gutted by authorities. The Chicago Public Schools went on a pension holiday in the 1990s after Mayor Richard Daley took control of the schools. Rather than continuing to adequately fund the Chicago Teachers Pension Fund, CPS instead diverted an estimated $1.2 billion to pay for other measures designed to hurt public school teachers, such as the creation of the Office of New Schools dedicated to opening up charter and contract schools that compensate city teachers significantly less.

Two years ago the IFT and CTU helped defeat a proposed Illinois state constitutional amendment which had it passed would have no longer mandated the state of Illinois to fund the state employee pension fund.

Then Ron Huberman was named the "Chief Executive Officer" of the Chicago Public Schools to replace Arne Duncan who left for Washington D.C. to be the Education Secretary. Huberman had just served as head of the Chicago Transit Authority where he did exactly what the state legislature passed - created a two-tier pension for the CTA workers where the young workers no longer are entitled to the same defined pension benefits and the retirement age increased.

Many believed Huberman was hired at the Board of Education to do the same thing - gut the Chicago Teachers's Pension Fund, which Huberman kept saying was one of the big reasons for the enormous $1 billion current budget deficit.

One of those who challenged Huberman's statements to the media attacking the teachers' pension was Jay Rehak, who along with Lois Ashford scored a surprising upset last fall by winning two seats on the Chicago Teachers Pension Fund Board on the CORE slate, an activist caucus that will be challenging the current CTU leadership in the upcoming May elections.

Unlike the other Board members, Rehak has been a vocal critic who attended Board of Education meetings where he directly confronted Huberman's attacks on the teachers pension.

"As an Illinois voter and member of the Chicago Teachers Pension Fund, I urge you to reject Senate Bill 1946 as amended," Rehak wrote in a letter. "This bill will take one of the best funded public pension systems in Illinois and erode its financial stability. Don't vote for a measure that is intended to resolve the state's pension problems, but actually will only make things much, much worse as we go forward. As a member of the CTPF, I recognize that we are in tough financial times. I also recognize that some effort to correct the state's current fiscal crisis is needed. But the way to solve one problem is not to create an even greater one. By reducing the obligation of the Chicago Board of Education to meet its legitimate and legal responsibilities, you will create far greater financial burdens for the Board in years to come, by most estimates an additional unnecessary cost of $12.8 billion by 2059."

The Chicago Board of Edcuation is required by law to pay $307 million to the pension fund by June 30, 2010, and this number will increase to $500 million next year, according to a CORE budget statement. This bill reduces the CPS pension bill by $400 million this year, according to the Sun Times.

The Chicago Teachers Union President Marilyn Stewart along with the other caucuses competing for her job in May are holding the line to not open the contract and give back pay raises and make other concessions. PACT presidential candidate Debbie Lynch wrote that CPS should cut some of the $700 million in outside vendor services and demand over $200 million in tax monies used in Tax Increment Financing districts be returned to the schools.

CORE said the CPS budget crisis is solely aimed at the teachers to demand major concessions by building public support for attacking teachers. CORE said that CPS must open its books and show the actual budget numbers before making such demands.

"For the past eight years the BOE has projected a deficit in January or February only to show surpluses in the actual audited budget as presented in August. These discrepencies have averaged over $400 million each year. The (Huberman power point budget crisis) presentation that we have been shown is not a budget."

While the authorities in Chicago have demanded give backs from the teachers and students in the classrooms due to the financial crisis, the state of Oregon quietly made the corporations pay by passing a tax on corporations. Despite the outcry from the business sector that included the usual rhetoric that such a measure would mean a loss of jobs, the unions helped pass the referendum.

House Speaker Michael Madigan has said he will not push for a state income tax increase to help pay off the state's buget deficits before elections, but again that is putting the financial crisis squarely onto the shoulders of the working class.

According to a report on CBS news, two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005. The study by the Government Accountability Office, also said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period. Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.

"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich, according to CBS.

Meanwhile, the Sun Times, Chicago Tribune and TV networks are parroting the line that only the teachers, students and taxpayers should pay for the mess the state is in. 


March 31, 2010 at 7:38 PM

By: George N. Schmidt

'Anonymous' = out of here

Please, people, either blog assertions of fact in your own name (last and first names) and with a real time real world e-mail address or find someplace else to peddle the puerile.

'M Casey' is now out of here until a real name is utilized. Not the first time (remember 'Zeta' -- who was a friend of CORE, by the way?) and I have a hunch won't be the last. I wrote to 'M Casey' a few hours ago and will reinstate the comment(s) when and if I hear back.

I was talking with one of our reporters this morning about how we don't want anyone spewing "facts" here who doesn't sign their name. Our reporters have risked a lot for the privilege of reporting. Those who want to come in with specific comments have to do the same.

SubstanceNews is not a blog, where anonymous spewings are the culture of the medium. We publish news and analysis about public education and allow wide-ranging comments. However, the anonymous and pseudonymous traditions of bloggers are not held in high esteem here, nor do we honor them when our commenters offer assertions of fact but wish to remain anonymous. Those who wish to comment that specifically here has to do so giving their first and last names.

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