Chicago Public Schools looking for cash can start by ending teacher pickups

Chicago Public Schools pension payment will increase by roughly $400 million due to the expiration of a temporary “pension holiday.” Local lawmakers knew this was coming but did nothing to prepare for the increased payment. The good news is there is a simple, responsible way to cut more than 30 percent of the increased pension...

Chicago Public Schools pension payment will increase by roughly $400 million due to the expiration of a temporary “pension holiday.” Local lawmakers knew this was coming but did nothing to prepare for the increased payment.

The good news is there is a simple, responsible way to cut more than 30 percent of the increased pension contribution – ending teacher pickups. Under this practice, the school district – and by extension, taxpayers – make pension contributions that should be made by employees. CPS currently pays the majority of employees’ pension contributions.

According to the CPS fiscal year 2013 budget:

In addition to the employer contribution, employees also are required by statute to contribute 9 percent of their salary to pensions (called the “employee contribution”). However, CPS pays 7 percent of the 9 percent for a total of $127 million budgeted in FY2013 for participants in CTPF.

That means requiring CPS employees to make their employee contribution into the pension system would save CPS $127 million, more than a third of the coming increase.

But instead of focusing on pension reform, Mayor Rahm Emanuel is considering temporary quick fixes and increasing property taxes above the current limits to fund CPS pensions.

Last week the Chicago Tribune reported that Emanuel:

… sought to lay the blame for upcoming Chicago Public Schools budget cuts on state lawmakers’ failure to extend pension relief, saying the loss in Springfield is now “on the doorstep of every school and every classroom in the city of Chicago.” The mayor refused to rule out teacher layoffs or a property tax increase as pension payments are expected to balloon from $196 million this year to $612 million in the next budget year, which begins July 1.

The pension relief Emanuel refers to is an extension of the pension holiday. The Illinois General Assembly granted CPS a partial pension holiday for fiscal years 2011 through 2013. That means CPS contributes much less than the recommended amount to its pension system.

Pension holidays create an appearance of budget relief while pushing the real pressure into the future. But Emanuel wants state lawmakers to extend the CPS pension holiday. And Gov. Pat Quinn indicatedthat he’d do so if Illinois lawmakers pass other pension reform at the state level.

And if state lawmakers don’t give Emanuel the fake reform he is looking for then the mayor may raise property taxes above the current limits to fund pensions. The Chicago Tribune reported:

“We’re not there yet,” the mayor said of raising the property tax cap. He added that it was a “preliminary point” to be discussing an adjustment to the cap.

Currently, CPS is allowed to raise its property taxes annually by either the rate of inflation or 5 percent, whichever is less … For each of the past two years, CPS has raised its tax rates to the maximum allowed under the cap. On Monday, schools CEO Barbara Byrd-Bennett said the issue was “still a work in progress” when asked about raising taxes above the cap. When Vitale was asked if the district was pursuing legislative efforts to increase property taxes beyond the limit, he said district officials had “proposed ideas down in Springfield.”

Emanuel’s threat of tax hikes is last thing Chicago needs. The mayor should instead focus on common sense reforms and stop the practice of CPS paying the pension contributions for its employees.