CPS to ask employees to contribute their fair share to their pensions

CPS to ask employees to contribute their fair share to their pensions

Chicago Public Schools CEO Forrest Claypool calls for an end to “pickups” of employee pension contributions, which would save the cash-strapped district $174 million a year.

Public school teachers in Chicago are legally required to pay 9 percent of their salaries toward their own pensions. But since 1981, as a result of contract negotiations between Chicago Public Schools, or CPS, and the Chicago Teachers Union, or CTU, Chicago teachers only pay 2 percent of their salaries toward their pensions.

For most employees in the private sector, retirement planning means contributing some of their earnings out of each paycheck to their personal retirement accounts. Employers often match employees’ contributions, and sometimes invest more. Similarly, the Social Security Administration requires working Americans and their employers each to contribute 6.2 percent of every paycheck to the Social Security Trust Funds.

But for many government workers in Illinois, including those at CPS, it doesn’t work that way. That’s because, in the 1980s, many government entities, including most Illinois school districts, began “picking up,” or paying, the employee’s pension share as an added employee benefit.

Now the new CEO of CPS, Forrest Claypool, wants to end those pickups as part of a plan to address CPS’s $1-billion budget deficit.

Requiring CPS employees to cover the employee portion of the pension contribution would save the district $174 million a year. Those funds could then go toward CPS’s employer pension contributions, which it has underfunded for years.

The Chicago Board of Education also backs ending pension-contribution pickups.

Claypool has announced that he’ll begin rolling back pension pickups, starting with his nonunion central-office employees. Ending pickups for those employees would save over $10 million a year by 2018.

The bigger savings, however, will only begin when pickups are phased out for CTU members.

Getting the teachers’ union to agree to ending the pickups won’t be easy. Karen Lewis, president of the CTU, warned that requiring Chicago teachers to contribute their own money toward their retirements is “strike-worthy.”

She may want to rethink that threat.

The last strike that Lewis led did nothing to help CPS’s finances, its teachers, or the more than 350,000 Chicago children who attend public school.

Instead, it left CPS with a bigger hole in its operating budget, ending in more than 4,000 pink slips for its employees and in school closures, along with an even bigger pension funding gap and a junk rating for CPS bonds.

Claypool is right to end teacher-pension pickups. It’s not out of line to ask employees to pay their share of the costs associated with their own retirement benefits.

And it would at least get CPS started on the many steps it needs to take to avoid bankruptcy.

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