Pension fund chief explains current situation... Protections taken away by mayoral control of CPS began with Jane Addams...
Charles Burbridge, executive director of the Chicago Teachers Pension Fund, published an op ed about the current situation. The Tribune's publication of the essay took place on September 17, 2015. Burbridge's essay is part of the ongoing work of pension supporters to present the public with the facts of history.
Charles Burbridge, above second from left, is the current executive director of the Chicago Teachers Pension Fund (CTPF). Above, Burbridge during the July 16, 2015 meeting of the trustees of the CTPF. Substance photo by George N. Schmidt.Chicago Tribune Publishes Burbridge's Perspective...CTPF Executive Director Charles A. Burbridge
The Chicago Tribune featured a Perspective piece written by CTPF Executive Director Charles A. Burbridge in the September 17, 2015, edition. The text of the article appears below:
In 1905, the Chicago Teachers' Pension Fund faced a crisis. There wasn't enough money coming in to pay for retirement benefits.
The president of the pension fund, Jane Addams - yes, the famous community organizer - turned to the Illinois General Assembly for help. A landmark law passed in 1907 required employees and employers to contribute to the fund and set up an elected pension board to oversee investments.
The retirement security that Addams protected for teachers is at risk again.
Pension holidays taken by Chicago Public Schools and approved by lawmakers have capsized the system and will cost taxpayers billions of dollars to correct. It's just the kind of action Addams sought to guard against more than 100 years ago.
We must protect our teachers and the taxpayers from these shortsighted decisions.
The first step: Stop talking about CPS declaring bankruptcy. That's a diversion from the real issues of education policy and funding. CPS bankruptcy - essentially allowing the state to insulate itself from the problem that it helped create - would be morally reprehensible. There are many parties responsible for this crisis. No one should be allowed to simply walk away.
The second step: Take three legislative actions to fix the system and prevent future funding failures. Those three actions are:
Make payments to the Chicago Teachers' Pension Fund mandatory by law. Pension funds across the country have something in common: Payments are mandated and the funds have strong tools to use if a payment is missed. Pension payments are not optional; they are promised to Chicago's schoolteachers as part of their contract. We have to stop pitting today's teachers against yesterday's teachers. Lawmakers, city and school leaders must recognize that teacher compensation and retirement funding are one in the same.
Commit to an actuarial-based funding plan that covers annual contributions and unfunded liability. Fully funded pension plans let experts (actuaries) determine the annual contribution needed to keep the plans stable. The Chicago teachers' fund is in a hole. We must stop digging. The problem was created by pension holidays. It can't be solved by more pension holidays.
Make monthly payments to the pension fund, not a once-a-year payment. Pension plans work when today's benefits are paid by yesterday's contributions and investment earnings, and today's contributions are invested to pay for tomorrow's benefits. Prudent investment practices demand that payments to the fund provide a constant stream of revenue that can be invested throughout the year. Monthly payments would save Chicago taxpayers tens of millions annually.
A century ago, Addams knew that for Chicago to thrive, teachers' pensions needed to be protected. If we are to thrive for the next century, that fundamental principle must never again be forgotten.
Chicago Tribune, September 17, 2015
