CPS pays $657 million for pensions, leaving district with $83M

Chicago Public Schools made a $657.5 million payment Thursday to the Chicago Teachers Pension Fund, the fund has confirmed, leaving the cash-strapped district of slightly less than 400,000 students with about $83 million.

But with state legislators agreeing on a stopgap budget and local property tax increase that would ship about $600 million more to Chicago’s schools, chief education officer Janice Jackson was among officials excitedly assuring families that school would open on time in September.

“I can say that there’s no one more excited about just more stability here today,” Jackson said, “and I’m happy to be able to look parents and teachers and students in the face and say that we will continue to provide them with the high-quality education that a world-class city like Chicago deserves.”

CPS didn’t yet know when it could see any of the approximately $350 million in new revenue from the state — including $205 million for pensions — or $250 million in new city property taxes. Nor could it say how cuts previously estimated at 40 percent to per-pupil funding would improve in budgets expected to be given to principals by mid-July.

“With a nearly $1 billion budget deficit before this agreement was reached, there is no doubt CPS will have to continue to tighten its belt, continue to gain efficiencies, but this agreement will help protect our classrooms so students can continue building on remarkable academic gains,” CEO Forrest Claypool said. “CPS is pleased that his could be the last pension payment that CPS has to make alone in the state, in terms of the state’s contribution.”

Along with other districts serving poor students, CPS has been trying to persuade Illinois lawmakers and the governor to reconsider the state’s funding formula, which CPS says penalizes school systems with a majority of poor students.

Thursday’s agreement “bought more time” to do that, Claypool said. “CPS will remain a strong advocate for a long-term equitable solution standing with our rural and suburban partners throughout the state of Illinois.”

The public schools have been operating on a line of credit after the Board of Education passed a budget that relied on a $480 million bump from Springfield that never came. That $870 million in credit will need to be paid back with property tax revenue once it arrives in August in CPS coffers, the district has said.

The district had been hoarding cash, asking principals this spring to hold off spending any money remaining in their budgets. It also informed charter operators that their quarterly payment expected in mid-July would be divided into monthly allotments in July, August and September.

“We do not anticipate cash flow in July if all revenue and expenses come in as expected,” district spokeswoman Emily Bittner said of the $83 million left after making the pension payment.

CTU President Karen Lewis called the news “a good step in the right direction.”

However, she cautioned, the extra funds targeted for CPS still left the system with a massive deficit.

“It’s not $941 million, which was the golden number they [CPS officials] told us they needed at the beginning of our negotiations” for the coming school year, Lewis said. “Where’s the rest of the money?”

Asked what the CTU might be willing to sacrifice to help make up the gap, Lewis said that decision is up to the CTU bargaining team. But she said the CTU already has sacrificed $1.2 billion in pension payments over five years, a 4 percent raise that Emanuel reneged on in 2011-2012, and more than a thousand layoffs in one year. “We’ve already given at the office,” Lewis said.

And any property tax increase will affect teachers who are required to live in the city, so their property taxes or rents are bound to go up under the deal, she said.

Lewis said she hopes the agreement will allow CPS to open with no increased class sizes, cuts to student and special ed services, or cuts to CTU members.

Charles Burbridge, head of the Chicago Teachers Pension Fund, confirmed that the district transferred $657,515,383.95 into fund accounts Thursday. Combined with earlier payments, he said CPS has paid a total of $676 million this year and the state an additional $12 million.

Burbridge said that nearly catches them up, but technically remains $12 million short of $700 million required in the fund’s actuarial tables.

“There’s been a misunderstanding about what the full contribution is,” he said. “It’s not something that I’m worried about. It’s something that they’ve been doing that we need to hash out” at a meeting scheduled in mid-July with a senior financial officer.

Bittner pointed to a 2015 court settlement affirming how the district has paid up in the past.