Chicago teachers no longer can save 40 sick days for retirement: now it’s 244

Chicago teachers no longer can save 40 sick days for retirement: now it’s 244

Pension benefits consume 25% of Chicago Public Schools’ budget. The new Chicago Teachers Union contract increases bankable sick days six-fold, increasing pension costs and taking more from classrooms.

The Chicago Teachers Union ended an 11-day walkout after reaching an agreement with Mayor Lori Lightfoot that’s poised to cost a total of at least $627 million during the next five years.

The tentative contract struck Oct. 31 includes a number of CTU’s compensation and staffing demands, while denying the union other top wishes such as affordable housing provisions, increased preparation time and a three-year contract. The deal will cost taxpayers at least $114 million in its first year.

But one detail that didn’t make headlines will hurt students and cost taxpayers for years: Unused sick days that can be traded for pension credit went from 40 days up to 244 days. That move will either boost teacher pensions or allow staff to retire earlier.

The sick day change will further undermine an already unsustainable pension system. With an average retirement age of 55, most CPS teachers contribute less than 2% of their salary toward their own retirements. The average Chicago teacher earns back those contributions only five months into retirement. The remainder of their lifetime pension benefits is largely billed to taxpayers, most of whom must contribute far more and receive far less from their own retirement funds.

CPS pensioners collect annual pensions worth up to 75% of their final career salary. Educators who enrolled in the Chicago Teacher’s Pension Fund prior to 2011 earn a 3% pension increase that compounds every year, meaning within 25 years those pensioners will be collecting double what they received in their first year of retirement.

Some political leaders disingenuously call those automatic raises a “cost-of-living adjustment,” or COLA, a term typically applied to accrual growth tied to the rate of inflation. The raises have far outpaced inflation.

High-and-rising pension costs have strained CPS teachers’ pension system, commanding a growing share of scarce education funding dollars and threatening the retirement security of younger teachers. The Chicago Teachers’ Pension Fund’s more than $13 billion in debt is highest among the eight city-related retirement systems. Despite saddling Chicagoans with a property tax burden that ranks among the highest in the nation, the teachers’ pension system is only 45% funded.

Pension experts consider a funding ratio of less than 60% to be “deeply troubled,” while a 40% funding ratio may be a “point of no return.” If the Chicago system’s funding level slides just slightly farther into the red, it might never be able to pay off its debts without structural changes, painful layoffs or service cuts.

One prominent picket sign during the CTU strike read “where are the funds?” The answer: pensions. Despite the state increasing its funding to CPS by $291 million – not the $1 billion erroneously reported by CTU – the pension system’s unsustainable demands consume a growing share of that state funding.

Of course, the new sick day provision is just one way in which the contract will strain the teachers’ pension system. The $62 million in automatic salary increases, on top of $5 million in salary increases for senior-level teachers, will mean higher pension benefits and greater strain on the underfunded system.

The students may be back in school, but the fiscal security that can keep them there remains threatened and taxpayers face greater uncertainty from unaffordable pension costs and the dysfunction that comes with it.

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