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Madigan bowed to huge campaign from unions and backed off from legislation again attacking public pensions... Chicago Pension Trustees Meet after Pension bill 'Retreat' by House Speaker and his corporate backers

The Chicago Teachers Pension Fund’s investment committee met in the aftermath of a temporary retreat by the state legislature to take another whack at Illinois worker pensions. The meeting took place after a massive campaign by the state's unions against legislation further undermining public employee pensions had succeeded. Powerful Illinois House Speaker Michael Madigan had backed off legislation again undermining the pensions.

Pension fund trustees Jay Rehak and Jeanne Freed at the November 2010 meeting of the CTPF. Substance photo by George N. Schmidt.The first fund manager to present to the CTPF board on Tuesday, June 7, highlighted its support for public education.

This was the first time a money manager has expressed its support for public education in the past two years that Substance has covered CTPF meetings.

Could this gesture have signaled another corporate bow to Chicago public school teachers?

Or a temporary tactical retreat, before corporate – politico forces gather once again for another all-out assault on the workers who continue to see their jobs, salaries, benefits and pensions slashed and burned?

The first temporary victory was house speaker Michael Madigan’s decision to pull the teacher pension bill off the floor after what the unions claim was an unprecedented massive grass-roots effort of teachers, activists, and state public employees to call their representatives to stop the bill.

Without a doubt, this round in the pension fight went to the people vs. the corporate class of billionaires and millionaires and their paid politicians who claim the state cannot continue to fund worker pensions. Under Senate Bill 512, existing teachers and state employees would have been given a choice of three retirement plans in which to enroll — one that preserves existing pension benefits but at a higher cost to the teachers, another with reduced pension benefits and a third that would amount to a 401(k)-style retirement plan.

Still, Madigan and his partner, the Civic Committee of the Commercial Club of Chicago (comprised of the top businesses working to gut worker pensions) said they will go to work over the summer to have a better bill (or tastier pill for unions to swallow?) in the fall, according to the Sun-Times.

Even the Sun-Tmes, which is applauding "pension reform" to cut the state’s pension liabilities, noted that there should be another budget analysis other than what the Civic Committee has presented, to make the numbers appear more objective.

The second victory took place at the CTPF meeting on Tuesday, June 7, 2011, with Harris Investments. Harris Investments has turned a $241 million teachers pension fund investment 12 years ago into $413 million today, at a 4.8% annual return.

But what appeared even more significant than making money for teachers, was Harris’s stated commitment to support public education as part of its charitable mission.

Harris proclaimed its commitment to supporting public education by stating they sponsor after school matters, principal for a day and Zapata Elementary School, a public school on the southwest side which they adopted.

“I’d like to recommend you fund a teacher for a day to see what’s it’s really like,” said teacher trustee Lois Ashford. “Let’s see what you’re really made of.”

Last year pension trustee Jay Rehak, who was elected on the reformist CORE slate along with Ashford, started to question money managers’ ties to privatizing public education. Rehak and Ashford’s win had upset the UPC, which had controlled all of the teacher seats on the fund before Rehak and Ashford won in 2009. Prior to Core winning now four seats on the fund, the UPC endorsed trustees had never raised questions about who they were investing teachers’ retirement funds with.

Rehak first started to question fund managers who handle unionized teachers pension money, while supporting charter schools. The question Rehak raised at the Feb. 2010 pension meeting was why should the CTPF continue to use money manager Muller and Monroe, whose director also sat on the board of directors of the University of Chicago charter schools, none of which are unionized. “Are they supporting something in the long run that will hurt teachers,” asked trustee Mary Sharon O’Reilly at the meeting.

Charter schools are privatized schools where the teachers are mostly not unionized and are paid far less than their public school colleagues represented by the Chicago Teachers Union.

Charter school teachers also pay into the teachers’ pension fund, although they most likely will not see a future pension because there is high turnover in sweatshop conditions where the teachers burn out after one or two years. However, not all charter school teachers – only those certified to teach - pay into the pension fund. Therefore, Rehak argued, the case can be made that supporting charter schools is not only hurting public education, but also the Chicago Teachers Pension Fund because less teachers will pay into the fund.

The Pension Board has decided that any future private equity firm looking to manage Chicago Pension Fund money must disclose if they have ties to a charter school.

Perhaps more present and future money managers will take note, and change the tune of hedge funds betting their money on charter schools. If there’s one thing the corporate class understands, it’s money, and the CTPF’s $11 billion fund currently has plenty of it.



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