Chicago Teachers’ Pension Fund goes five years with no growth

The Chicago Teachers’ Pension Fund, or CTPF, lost money last year. Although pension trustees predicted the fund would earn $778 million in fiscal year 2012, the fund actually lost more than $38 million. The system posted an investment return of -0.4 percent, far below the 8 percent expected. That brings the five-year average return to...

The Chicago Teachers’ Pension Fund, or CTPF, lost money last year.

Although pension trustees predicted the fund would earn $778 million in fiscal year 2012, the fund actually lost more than $38 million. The system posted an investment return of -0.4 percent, far below the 8 percent expected. That brings the five-year average return to exactly 0 percent.

Unfortunately, when investment returns come in under projections it falls on taxpayers to make up the shortfall. The more than $800 million of missing investment income will be added to the unfunded liability, and Chicago taxpayers will be paying more and more money during the next 30 years to make up for the poor returns.

Next year’s employer contribution to the CTPF will nearly triple. The required contribution for fiscal year 2014 will rise to $625 million, up from $219 million required in fiscal year 2013.

The simple fact is that the pension fund for Chicago teachers is broke. It doesn’t even have enough money on hand to pay out benefits to teachers who have already retired, let alone those still in the classroom.

The longer lawmakers delay action, the worse this pension debt crisis will become. Only major reforms, like moving to defined contribution plans for all future work and tackling the automatic, compounded cost-of-living adjustment, can get the problem under control.