In anticipation of a giant $634 million pension payment due Tuesday but unlikely to come, the head of the Chicago Teachers Pension Fund said Friday he is working on a contingency plan.
So far, that doesn’t include a lawsuit.
Charles Burbridge already set a meeting of the fund’s trustees for July 1, a day after the Chicago Public Schools system is due to pay $634 million toward its teachers’ pensions, just in case, he told the Sun-Times in an interview.
“The trustees would have to see where to go from there,” he said. “Nobody wants to sue.”
“If someone could come and say here’s what we plan to do, we’d listen. I don’t think anybody is expecting that at 9:00 when the courts open on Wednesday, we’ll have our lawyers there.”
CPS will run out of cash this summer if it has to make the full payment — and then will be faced with severe cuts to schools. Making a partial payment could further drop the district’s bond rating that’s already at junk status — and could invite a lawsuit from the pension fund.
An agreement was shot down last week in the state Legislature. It would have given CPS until August 10 to make the payment — that’s the same day state money is disbursed to districts. But Illinois House Speaker Michael Madigan said he would on Tuesday recall the agreement reached between Mayor Rahm Emanuel, Gov. Bruce Rauner and leading Democratic lawmakers, adding, “I‘m sure it can be done.”
The pension fund wants its money but hasn’t formally opposed the bill, a stance, Burbridge said, that “speaks on the maturity of our trustees.”
Whatever happens Tuesday, “complicates things but it doesn’t stop payments to the pensioners,” Burbridge said. Benefits for retirees have already been set aside for July.
“We would have to liquidate assets to make the $100 million monthly payout to retirees,” in August, he said.
Burbridge also said he’d welcome future “normal cost” payments directly from the State of Illinois, which Gov. Bruce Rauner suggested Thursday in exchange for Chicago giving up block grants to schools, but would urge them to be made monthly rather than once a year.
The governor would be “open to negotiating that,” spokesman Mike Schrimpf said. So far, City Hall has been cool to the idea.
Contributing: Tina Sfondeles
