Supreme Court pension decision affirms Chicago Teachers Union charge that Chicago Public Schools became 'Broke on Purpose'... Years of bizarre waste on privatization schemes, TIF giveaways, and toxic swaps now land on the eve of the union contract expiration...
For reasons known only to the editors, the Sun-Times and Tribune missed the dramatic photograph of Chicago Teachers Union President Karen Lewis speaking to reporters about the "manufactured crisis" of Chicago Public Schools finances following the CTU House of Delegates meeting of May 6, 2015. Above, Lewis can be seen speaking beneath the screen showing the CTU slogan "Broke on Purpose!" while surrounded by more than 100 of the 800 members of the House of Delegates who attended the meeting the was followed by the press conference. Substance photo by George N. Schmidt.A close reading of the 35-page Illinois Supreme Court decision in the public worker pension case (announced on May 8, 2015) shows that the court agrees with the major charge made by the Chicago Teachers Union two days earlier at a press conference: governments are "Broke on Purpose" under the current situation. Although the court's ruling was based on litigation filed by members of other pension funds in Illinois against SB1 (which became law after being signed by then-governor Pat Quinn), it applies to the Chicago Teachers Pension Fund (CTPF) as well.
Under the Illinois Constitution, public worker pensions may not be "diminished or impaired". Period. That's the letter of the law, and despite the fact that the governors (past and present) and Chicago's mayor are trying to dodge their obligations, the fact is that the law requires them to fund the pension funds adequately.
At issue, finally, is how government officials have refused to provide enough revenue to meet their obligations, not only to the pension funds, but to provide the public with adequate public services. Since the orgy of privatization began in the 1990s and accelerated under President Bill Clinton (whose "welfare reform," "housing reform," and "education reform" were all part of the same corporate attack on the public sector), the refusal of national, state and local government leaders to balance budgets by raising taxes on the wealthier in society has resulted in the present problem. But despite the cry of "crisis" in lurid newspaper headlines, as the CTU leadership has charged, this is a "manufactured crisis" -- the work of men and women, not the result of some natural disaster.
Chicago Teachers Union President Karen Lewis reminded reporters that the union has demonstrated that CPS finances have been manipulated, but most of what the union charged has been ignored. Above, Lewis is seen surrounded by the union officers (Jesse Sharkey, Michael Brunson, and Kristine Mayle) while delegates, most wearing 'CTU Red" stand silently in support of the union's position. Substance photo by George N. Schmidt.Will the change change the silly narrative that has dominated discussion of public services and public budget since the Clinton years? That remains to be seen. As late as May 9, the Chicago Sun-Times, owned by a millionaire friend of Mayor Rahm Emanuel, still headlined the Supreme Court story using the term "pension reform." The Tribune's headline and story were less luridly slanted.
RAHM EMANUEL'S TALKING POINTS WERE PUT FORWARD IN A PRESS RELEASE...
STATEMENT FROM MAYOR RAHM EMANUEL ON IL SUPREME COURT DECISION ON STATE PENSION REFORM
FOR IMMEDIATE RELEASE, May 8, 2015
CONTACT: Mayor�s Press Office, 312.744.3334, press@cityofchicago.org
�Since taking office, our goal has been to find a solution to Chicago�s pension crisis that protects taxpayers while ensuring the retirements of our workers are preserved -- something we achieved with Chicago�s pension reform for the Municipal and Laborers funds. That reform is not affected by today�s ruling, as we believe our plan fully complies with the State constitution because it fundamentally preserves and protects worker pensions rather than diminishing or impairing them. While the State plan only reduced benefits, the City�s plan substantially increases City funding which will save both funds from certain insolvency within the next ten to fifteen years and ensure they are secured over the long-term. Further, unlike the State plan, the City�s plan was the result of negotiation and partnership with 28 impacted unions to protect the retirements of the 61,000 city workers and retirees in these funds and ensure they will receive the pensions promised to them.�
Background on How City Pension Security Reform (SB1922) Differs from State Reform (SB1)
Cooperation
� Unlike SB1, SB1922 was the result of several months of negotiation with 28 of the 31 unions that represent participants in the city�s municipal and laborers Funds.
Preserving and Protecting -- First-Ever Full Funding Guarantee with Substantial Increase of City Funding
� In the past, there was no City obligation to fully fund the municipal and laborers� pension funds. Absent the increased funding guaranteed by SB1922, the unfunded liabilities of these two funds would continue to increase by $2.48 million per day, or $900 million per year, ensuring the insolvency of both funds by 2026 and 2029 respectively.
� Under SB1922, the City agreed to substantially increase funding of these funds to ensure that they are essentially fully funded within 40 years.
� In contrast, SB1 only reduced benefits. It did not provide any increase in the State�s funding obligations as SB1922 does for the City.
� Per the terms of the law, in 2015, the City is increasing its contribution to these funds by approximately 50 percent or $89 million � from $177 million to $266 million. By 2021, the City�s funding will increase to $650 million. At the same time, employee contributions to the Municipal and Laborers Funds will increased by 0.5% a year, going from 8.5% of regular salary to 11% over the next five years. That means that for every additional $1 that employees/retirees contribute to shoring up the funds, the City of Chicago contributes an additional $2.
