Chicago Board of Education pays its fair share to the Chicago Teachers Pension Fund for the first time since 2010
At the end of June 2014, for the first time since 2010, the Chicago Board of Education paid its share of the money owed to the Chicago Teachers Pension Fund (CTPF) for the first time since 2010. At that time, based on the false claims that Chicago Public Schools was facing a "billion dollar deficit," then Chicago schools "Chief Executive Officer" convinced Senate President John Cullerton that CPS needed a three year "pension holiday." The holiday, which became law thanks to the work of the leaders of the Illinois House and Senate and Governor Pat Quinn, cost the Chicago pension fund a total of $1.2 billion.
One of the reasons that the Huberman lie was convincing was that the leaders of the Chicago Teachers Union at that time, under the United Progressive Caucus and Marilyn Stewart, had no research department and were unable to prove that Huberman's claim was not true. Huberman actually told the leaders of he General Assembly in April 2010 that Chicago would not be able to open its schools in September 2010 without the so-called "pension holiday."
The inability of the large and still powerful union to refute the claims of CPS officials -- who has been grossly exaggerating their "deficit" claims for more than a decade -- was one of the reasons why Stewart and her "United Progressive Caucus" lost the 2010 CTU elections to the CORE (Caucus Of Rank and file Educators) caucus headed by Karen Lewis, then a chemistry teacher at King HIgh School. But by the time Lewis and her team moved into power at the CTU in July 2010, the damage to the pension fund had been done -- for that year and the next years.
Subsequent phony deficit claims by Huberman and his successors (CPS has had three "Chief Executive Officers" since Karen Lewis was elected president of the CTU in a runoff in June 2010) have been regularly refuted by research from the union. The union has also noted that Chicago's schools need more revenue, noting how the Illinois and Chicago tax structures are slanted to benefit the wealthiest people in the USA and overtax the poor and working class.
In a June 27, 2014 press release, the Chicago Teachers Pension Fund reported as follows:
Chicago Teachers' Pension Fund Receives Full 2014 Payment from CPS
CHICAGO - June 27 , 2014 - The Chicago Teachers' Pension Fund (CTPF) received more than $585 million earlier today, completing the $612.5 million required contribution from the Chicago Board of Education (BOE) for the 2014 fiscal year.
"This is an important step. This payment marks the first time since 2010 that the BOE has made a full payment of its pension obligation," said Jay C. Rehak, CTPF president of the board of trustees and interim executive director. "Our members pay their pension obligations in full with every paycheck - every month, every year - and have never missed a payment. We appreciate the employer doing the same."
"CTPF is a well-managed plan that has generated an 8.86 percent average return over the last 35 years," said Rehak. "Our financial situation has deteriorated because our employer and the state underfunded this plan for decades. As a result, our plan's funded ratio has fallen from 100 percent in 2002 to our current 49.5 percent."
Before 1995, CTPF collected a property tax levy directly from the city of Chicago to fund pensions. Legislation passed in 1995 allowed CPS to divert the property tax levy into its operating budget. Between 1996 and 2005, the BOE collected $2 billion in property tax revenue but did not make actuarially required contributions to support the fund. At the same time, the state of Illinois - which had agreed, in principle, to fund CTPF at 20 to 30 percent of the amount it funded the downstate Teachers' Retirement System (TRS) - has never seen fit to honor that commitment.
CTPF's fiscal situation was exacerbated in 2010 when the Illinois General Assembly passed PA 96-0889 which allowed the BOE to reduce its payments from 2011 to 2013. This pension "holiday" cost CTPF an additional $1.2 billion.
"Our fund has had an actuarially based funding schedule in place for many years, but without a consistent, reliable source of revenue - it means nothing," said Rehak. "Our teachers who do not contribute to Social Security depend on their pensions for financial security in retirement. We hope that this payment is the first of many as our fund pursues full funding."
ABOUT CTPF
Established by the Illinois state legislature in 1895, the Chicago Teachers' Pension Fund manages members' assets and administers benefits. The $9.7 billion pension fund serves approximately 63,000 active and retired educators, and provides pension and health insurance benefits to more than 27,000 beneficiaries.
