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Corporate attack on Chicago public workers, defined benefit pension plans escalates in Illinois... Mayor, Republicans propose legislation to destroy Chicago Teachers Pension Fund Board of Trustees and replace it with mayoral appointees

George N. Schmidt - October 07, 2011

After at least six secret meetings, another of which was held during the first week of October, Illinois politicians have quietly introduced legislation that would destroy the Chicago Teachers Pension Fund Board of Trustees as an elected entity with ten members elected by those affected by the Fund. The new legislation would replace the current trustees with a seven-member Board of Trustees, four of whose members would be appointed by Mayor Rahm Emanuel.

Illinois Republican House leader Tom Cross, above, has introduced legislation that would take away the rights of Chicago teachers, principals and retired teachers to elect the majority of the trustees of the Chicago Teachers Pension Fund. Under Cross's proposal, which has the support of the Chicago Tribune and corporate leaders in Chicago (including the Civic Committee of the Commercial Club), Mayor Rahm Emanuel would appoint four members of the Board of Trustees, and the remaining three would be from other methods. The proposed change to current pension law, which was introduced by Tom Cross, the leader of the Republican minority in the Illinois House of Representatives, covers a number of public worker pension issues and has come to public light following a series of reports, primarily in Tribune Corporation media, depicting the public worker pension funds as corrupt. The proposed legislation, known as HB 3827, was introduced on October 5, 2011.

The current Board of Trustees consists of 12 members. Six of those are elected by active-duty teachers, three are elected from retired teachers, and one is elected by Chicago principals. Only two members of the current 12-member Trustees are in effect appointed by the mayor, since both of them (Rodrigo Sierra and Andrea Zopp) are members of the Board of Education that was appointed in May 2011 by Mayor Rahm Emanuel. The structure of the fund goes back more than 100 years and was established to ensure that those who are most affected by the CTPF are represented by a majority of the trustees, in part so that the investment decisions of the fund are not in the hands of politicians, according to informed sources and available histories of the CTPF,

A synopsis of the legislation, which was introduced on October 5 and is currently available on the Illinois General Assembly website, includes the following:

"...Amends the Chicago Police, Chicago Firefighter, Chicago Municipal, Chicago Laborers, Chicago Park District, and Chicago Teacher Articles of the Illinois Pension Code to terminate the existing pension boards 90 days after the effective date of the amendatory Act and to provide for a new board comprised of 4 members appointed by the Mayor of the City of Chicago and 3 elected members representing active members and annuitant members of the fund...."

The legislation, known as HB 3827, was quietly introduced for the Veto Session of the Illinois General Assembly by Republican Representative Tom Cross, House Minority Leader, and Rep. Denise Senger, also a Republican. According to reports in Crain's Chicago Business, the proposed legislation has the support of House Speaker Michael Madigan. The Veto Session begins in two weeks.

The complete synopsis of the proposed legislation reads as follows:

"Synopsis As Introduced

Amends the Illinois Pension Code. Provides that any reasonable suspicion by any appointed or elected commissioner, trustee, director, board member, or employee of a retirement system or pension fund created under the Code or the State Board of Investment of a false statement or falsified record being submitted or permitted by a person under the Code shall be immediately referred to the board of trustees of a retirement system or pension fund created under the Code or the State Board of Investment or the State's Attorney of the jurisdiction where the alleged fraudulent activity occurred, and that the board of trustees of a retirement system or pension fund or the State Board of Investment shall immediately notify the State's Attorney of the jurisdiction where any alleged fraudulent activity occurred for investigation; Amends the Chicago Police, Chicago Firefighter, Chicago Municipal, Chicago Laborers, Chicago Park District, and Chicago Teacher Articles of the Illinois Pension Code to terminate the existing pension boards 90 days after the effective date of the amendatory Act and to provide for a new board comprised of 4 members appointed by the Mayor of the City of Chicago and 3 elected members representing active members and annuitant members of the fund. Amends the Cook County Article of the Illinois Pension Code to terminate the existing board of trustees 90 days after the effective date of the amendatory Act and to provide for a new board comprised of 5 members appointed by the President of the Cook County Board of Commissioners and 4 elected members representing active and annuitant members of the fund. Effective immediately."

Chicago billionaire Penny Pritzker, above during the June 22, 2011 meeting of the Chicago Board of Education, was among the seven people appointed to the Chicago Board of Education by Mayor Rahm Emanuel in May 2011. Priztker is a prominent member of the Civic Committee of the Commercial Club, which has begun running advertisements across Illinois attacking the pension plans of public workers, including Illinois teachers. Substance photo by George N. Schmidt.The attack on the democratic structure of the Chicago Teachers Pension Fund and the other funds comes after several months of behind-the-scenes and public planning by Chicago's corporate elites, led by the Civic Committee of the Commercial Club (an organization composed of the CEOs of the state's largest corporations) and the Civic Federation (a corporate sponsored organization that represents itself as a "non partisan" research group).

Preparation for the latest round in the attack on public employee pension plans was laid with editorials and Op Ed pieces in the Chicago Tribune, and carefully selective "investigative" news reports conducted by reporters from the Chicago Tribune and WGN. The "investigative" pieces focused on a handful of relatively large pensions being received by union officials who were able to include their union wages in their final pension calculations. The Tribune and its allies also editorialized against the public employee pensions regularly.

The Civic Committee is an exclusive club, consisting mainly of the CEOs of the largest corporations in Illinois. One of its members is Penny Pritzker, the billionaire heiress who was appointed in May 2011 to the Chicago Board of Education by Rahm Emanuel.

Despite speculation that Democratic political leaders in addition to Mayor Emanuel had come out in support of the proposed legislation, that does not seem to be the case. According to Steve Brown, spokesman for House Speaker Michael Madigan, the Speaker has not studied the Cross bill. "To be frank, this is the first time I've heard of the proposal to change the structure of the Chicago Teachers Pension Fund," Brown told Substance. Speaker Madigan has been traveling recently, according to Brown.

The "Veto Session" of the Illinois General Assembly generally lasts two weeks in the Fall. It is currently scheduled to begin on October 25. The Cross bill could be heard at that time. Brown pointed out that to pass the bill would have to get a three-fifths vote.

Substance has requested comment from Mayor Emanuel, from the Civic Federation, and from CTPF trustees and will report those as they become available.

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