CHICAGO — $700 Million. It’s an amount that’s difficult to get your mind around. But that’s how much Chicago Public Schools owes its teachers’ pension fund. Payment is due this summer.
“The problem we have is for two decades the employer didn’t do their part,” Chicago Teachers’ Pension Fund director Chuck Burbridge told WGN Investigates. “They skipped payments.”
They were called “pension holidays” and they were orchestrated under the watch of former Mayor Richard M. Daley and passed by the Illinois legislature under Democrat and Republican governors.
“The reason it’s $715 million today and not $215 million is because there was a period of almost two decades where they didn’t make appropriate payments to the fund,” Burbridge said.
The financial hole is so deep Chicago Public Schools officials are taking out what some have called a “payday loan.” They’re looking for $389 million that will be guaranteed by payments later this summer from the state.
“Lenders will be lining-up to make this loan,” said Brian Battle of Performance Trust.
CPS’s bottom-dwelling credit rating means bankers will likely charge three times the amount in interest a financially health school district would pay.
“In crisis management the first rule is: If you’re in hole, stop digging,” Battle said.
Experts say the only solution to chronic funding problems is higher revenue in the form of taxes. However, they caution added revenue will be meaningless without structural changes to the pension system.
While Gov. Bruce Rauner and Mayor Rahm Emanuel criticize each other weekly over school funding and the pension crisis, the head of the Chicago Teachers’ Pension Fund says he isn’t interested in assigning blame. And he understands the frustration of taxpayers.
“This generation of taxpayers is being asked not only to pay for services they are consuming but they’re also having to pay off the IOU’s,” Burbridge said.
How big are the checks written by Chicago Public Schools to the teachers’ pension fund? They’re so large that two years ago CPS had to write seven separate checks on a single day because the district’s check writing software was incapable of issuing checks larger than $99,000,000.