Pension Reform
7:28 am
Thu July 25, 2013

As Chicago Schools Stumble, A Look At Shifting Pension Costs To Downstate Districts

Rahm Emanuel
Chicago Mayor Rahm Emanuel speaks with school district officials in this 2011 file photo
Credit cityofchicago.org

Chicago Public Schools continue to face severe budget problems.

The district is laying off staff and cutting programs.

Those reductions are due in part to its pension obligations.

Tony Arnold reports on how Chicago Public Schools’ struggling pension system could actually be used as a model for every other school in Illinois.

In this year alone - Chicago Public Schools says it’s a billion dollars in debt.

To give you an idea of what that means for schools - here’s how Guadalupe Rivera at Morrill Elementary School on the southwest side says her school could be affected.

RIVERA: We used to have four teaching assistant positions and two special education teaching positions and those had to be cut.

And

RIVERA: Programs used to help students who were struggling. They would help differentiate instruction. They helped English language learners as well.

And

RIVERA: We want students to join a sport, they have to pay $50 for a sport.

And she says the list goes on.

Cuts like these are being proposed at schools all around the city.

The school system says these cuts are happening for a few reasons.

Peter Rogers - the chief financial officer - says the main reason - is because the district owes an added 400 million dollars just for its retirement system this year.

ROGERS: The biggest factor in terms of increase year-over-year, is without a doubt, far and away, the pension fund required increase and it will continue to do so over the next several years.

Earlier this year - the district tried to temporarily delay paying the whole 400 million dollars in one budget cycle.

But to do that - it needed the ok from Illinois lawmakers in Springfield.

And that didn’t go so well.

At the time - Republican State Representative Dennis Reboletti said he’d seen the district ask for similar measures in the past...

REBOLETTI: You talk about the definition of insanity is doing the same thing over and over again, expecting a different result. This pension holiday will probably work better than all the previous pension holidays.

The bill failed - meaning Chicago Public Schools has to pay that extra 400 million into its pensions.

Yet two of the most powerful lawmakers in Springfield continue to push to make Chicago’s pension structure the model for every other school in the state.

Chicago contributes to its own pensions.

But the state pays for suburban and downstate schools.

And lawmakers like House Speaker Michael Madigan say it’s high time those schools pay for their own teachers’ pensions.

Madigan even has a phrase he likes to call it.

Madigan says it’s bad management to have the state pay for teachers’ pensions - when the school districts can set the retirement benefits.

And Senate President John Cullerton is on the same page.

CULLERTON: We have to pay, some anomaly in the law, for all of the suburban and downstate teachers, all the university employees and all the community college employees. That’s the state’s obligation. No other state has that. And the reason why we fell behind in making these payments is because the bill is so high.

But while Cullerton is pitching that all school districts should pay for their pensions - he’s also proposing that the state help Chicago’s schools with its pension obligations...

That extra 400 million dollars that’s being partly blamed for causing all the cuts.

CULLERTON: All these cuts that you’re hearing about in these schools, that’s directly related to the Chicago teachers’ pension crisis and we really have to focus on that, even, arguably, even before we do the state pension funds.

The situation makes Dave Pruneau look at Chicago’s pension difficulties as a cautionary tale for every other school in the state - if pension costs eventually get shifted to the districts.

PRUNEAU: They’re going through a lot of - kind of a precursor of where we might be in a lot of districts in Illinois in the next few years.

I meet Pruneau at the district where he serves as superintendent - in west suburban Elmhurst.

PRUNEAU: Ok. This is Hawthorne Elementary School...This is the building, the latest renovation, so this was an old building, a very tired building...

Pruneau says his school district has seen about 6 million dollars in cuts in the past three years.

And those reductions have mostly been administrative...

But if the district has to gradually start finding money for its teachers pensions - those cuts could start moving into the classroom.

Pruneau pitches the idea of capping how much pension costs suburban and downstate schools should have to pick up.

But regardless of what is eventually decided - whether Elmhurst starts paying for its teachers pensions or not - Pruneau says he’s already seen a consequence of the ongoing debate.

PRUNEAU: It’s very tough right now beyond a one or two-year window to plan long-term because you just don’t know what’s happening on the revenue side with the state.

ARNOLD: So those capital projects that you have on your wish list...

PRUNEAU: Are on a wish list.

Something every other school in the state could be seeing.

I'm Tony Arnold.