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Union: Privatizing all CPS buildings could harm city pension fund

Chicago Public Schools has doubled the number of school buildings to be managed by private companies, but the engineers union says won’t save money.

Mayor Rahm Emanuel wants to take out a short-term loan against expected state grant payments to get CPS through the end of the regular school year. | File photo

Chicago Public Schools has doubled the number of schools whose facilities will be managed by private companies, a move the engineers union says won’t save the broke district any money.

The president of the International Union of Operating Engineers Local 143 also warned that CPS’ plan to move all 550 buildings to private managers will come with a larger cost to the city’s struggling municipal employees’ pension fund.

“The engineers they’re going to hire are our people, but they’re going to take us out of the CPS payroll and out of the pension fund,” said union president Bill Iacullo, who is in ongoing contract negotiations with the district. “The problem with that is, it’s gonna hurt the pension funds, the municipal pension fund that the mayor is trying to shore up.”

The fund’s executive director, James Mohler, told engineers that a “sudden removal of a large number of contributing employees can be detrimental” to the pension fund. He also warned that a mass termination of eligible workers could lead them to retire sooner, straining the fund to pay benefits for a longer time. Mohler couldn’t immediately be reached for comment.

The city still is looking for a solution to sustainably fund the municipal pensions, which currently stand at about 33 percent.

The Board of Education unanimously voted last week to double to 60 the number of school buildings that will be entirely managed by SodexoMAGIC, a private facilities management company that has donated to Mayor Rahm Emanuel’s campaign fund. The board also agreed to let Aramark take over the management of 18 school buildings it previously just cleaned.

That move won’t decrease the number of engineers in Local 143, whose contract expires at the end of next month, but the district’s long-term plan to hand over all school facility management to a private company would.

In an ongoing bidding process, the district has asked for proposals for a private provider to handle the management of all school cleaning, extermination, snow removal and repairs — or “integrated facilities management” in CPS-speak.

CPS said the immediate expansion of services to both Sodexo and Aramark will fall under the three-year contracted caps of $260 million with Aramark and $80 million with Sodexo. Sodexo will be paid another $12 million for the extra schools, CPS said.

Aramark has been paid about $167 million and Sodexo about $37 million since 2014.

The district says it’s looking for efficiency rather than cost savings, and this model of handling facilities gives principals a single contact to handle problems.

“The results of the initial pilot have shown us that the IFM model has the potential to improve facility services without increasing costs,” district spokesman Michael Passman said in an email.

Iacullo questioned that logic, telling the board, “I don’t know how you could save money when companies make a profit off of their services.”

He said his union made a money-saving proposal for a five-year contract to CPS but it was rejected.

CPS contests the validity of those projected savings.