Lightfoot’s 2020 budget requires CPS repay $60 million for pensions

At a time when union leaders claim another $38 million could end the teachers strike, Mayor Lori Lightfoot’s 2020 budget requires the Chicago Public Schools to reimburse the city for $60 million in pension contributions previously covered by City Hall.

The historic about-face is buried in the mayor’s budget overview.

It states: “In 2020, an additional $60 million is expected from Chicago Public Schools to cover a portion of its share of the city’s annual contribution to the Municipal Employees’ Annuity and Benefit Fund.”

For years, City Hall has covered the school system’s annual contribution to the largest of four city employee pension funds.

This year, Lightfoot needs the money to chip away at the city’s $838 million shortfall triggered, in part, by the city’s own rising pension payments.

And, according to a Chicago Teachers Union official, Lightfoot also wants CPS to repay the city for $33 million in security costs, although the city says that’s not a new demand this year.

The $60 million pension reimbursement that would essentially claw back nearly 37 percent of the $163 million she is forwarding to CPS after declaring the largest tax-increment-financing (TIF) surplus in Chicago history.

“CPS is the only sister agency that the city subsidizes by way of pension contributions. Every other sister agency pays its own fair share,” Chief Financial Officer Jennie Huang Bennett told the Sun-Times.

More than 55 percent of Municipal Employees’ Annuity and Benefit Fund employees are CPS employees, she said.

“We’re really basically looking to get to better accounting and transparency around what costs belong in different sister agencies,” she said. “ ... Ultimately, it’s money that they owe. ... It’s about making sure that all of the various sister agencies live within their means and that we are all paying our fair share.”

Lightfoot’s $60 million pension reimbursement demand comes at a critical time. It could be the difference between ending Chicago’s longest teachers strike since 1987 or continuing it.

CTU Vice President Stacy Davis Gates has argued $38 million is all that separates the two sides.

Fran Spielman/Sun-Times

On Monday, Davis Gates showed up at City Hall to lobby aldermen during the first day of City Council budget hearings.

She argued that, in addition to the $60 million pension reimbursement, Lightfoot is demanding that CPS reimburse the city for $33 million of the $80 million in school security costs assumed by former Mayor Rahm Emanuel two years ago. Huang Bennett told aldermen, however, that the $33 million was not a new demand by the city this year.

“Costs that were shifted from the city to the schools is in the way of a contract settlement. ... Cops were paid out of the city budget. That pension shift was paid out of the city budget. She [Lightfoot] has taken $33 million of that back. She has also taken over $60 million back for the pension cost shift. ... That’s worse than Rahm,” Davis Gates said.

“The mayor has effectively put [nearly] $100 million in the CPS budget line that had previously been on the city budget line to try and balance the city budget, which is making these talks more difficult.”

After meeting with Davis Gates, Ald. Jason Ervin (28^th) was asked whether the Black Caucus he chairs would urge Lightfoot to reverse her reimbursements demands.

“The schools are a unit of government that have to be self-sustaining,” Ervin said. “There is some concern that these costs that were borne by the city naturally should have been borne by CPS. We need to … get that issue solved and ultimately have sustainable revenue for both Chicago Public Schools and the city of Chicago so we’re not one year doing one thing and next year reversing course.”

Education Committee Chairman Michael Scott Jr. (24^th) said only that the two sides are “very, very close” and CPS students, including his own two children, “need to get back in school.”

Schools CEO Janice Jackson joined the stalemated negotiations on Sunday and lobbied aldermen Monday, refusing to talk to reporters as she left City Hall.

Jackson has maintained the union’s unresolved demands would require another $100 million and that CPS “can simply not afford” to sweeten its $500 million offer.

On Monday, Huang Bennett denied CPS could end the teachers strike by continuing the pension subsidy.

“This would not pay for what it is the CTU is asking for,” Huang Bennett said.

“We also in this budget did provide an unprecedented level of support for CPS through the TIF surplus. It is the highest surplus in the city’s history. So it’s not to say that there aren’t things in this budget that help CPS.”

Emanuel endured a seven-day teachers strike in 2012 and used an $87.5 million TIF surplus to stave off a second teachers strike.

Huang Bennett has acknowledged the $163 million cash infusion CPS will receive from Lightfoot’s first budget amounts to “one-time revenue” that cannot be sustained. It was achieved by closing out five TIFs and scouring all of the others, a process Huang Bennett likened to “scraping the mayonnaise jar.”

“It does buy … CPS some additional runway in order to find alternative revenue sources — long-term, structural revenue sources — to be able to fund the remainder of the contract in future years,” she said. “They’re gonna need to find additional revenues going forward.”

It’s not the first time that City Hall has snatched back funding from CPS.

From 2009 to 2011, CPS paid the Chicago Police Department $8 million annually to station two police officers at every high school for the eight-hour school day. That was roughly $80,000 per school.

Former CPS Chief Administrative Officer Tim Cawley called it a “sweet deal” that did not reflect the actual cost of roughly $250,000 per high school.

Shortly after taking office, Emanuel stripped teachers of a previously negotiated 4% pay raise and used the $80 million in savings to pay the Chicago Police Department retroactively, going back to 2009.

That helped the mayor solve a budget crisis, because it was roughly $70 million more than CPS originally agreed to reimburse the city for police services in schools.

In 2017, Emanuel did an abrupt about-face, agreeing to cover up to $80 million in security costs for CPS. He predicted he could assume that annual burden “without a citywide tax increase.”