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Chicago teachers asked to raise pension contributions

District looks to save about $130 million per year

Combating a $1.1 billion deficit, Chicago Public Schools’ new budget proposal phases out district pension contributions for central office, regional and non-union support staff. The district says the change will save about $11 million annually once fully implemented in 2018.

A state-mandated $676 million pension contribution accounts for a large chunk of the deficit, district officials say. Unlike most other districts in Illinois, Chicago and its local taxpayers are required to pay 7 percent of the 9 percent pension contribution for all employees.

While the changes won’t impact principals and assistant principals, 2,100 nonunion employees will contribute 2 percent more to their pensions this year. Next year, those employees will pay an additional 2 percent, and, the following year, another 3 percent.

District CEO Forrest Claypool and Mayor Rahm Emanuel want Chicago Teachers Union members to follow suit, and pay for their own pensions. If teachers contribute the full 9 percent, instead of the current 2 percent, the district would save about $130 million per year. This plan would be phased in over time, Claypool has said, but Chicago Teachers Union President Karen Lewis says this would amount to a 7 percent pay cut.

“Our goal is to protect classrooms and protect teachers’ pensions, which will require everyone pitching in—and we’re leading by example by ending pension pickup for central office staff,” Claypool said in a statement. “Making pension payments at the expense of our children’s classrooms could result in reductions of thousands of teachers and unacceptable class sizes.”

Claypool also stated that any changes would happen slowly over time. The issue will be part of ongoing teacher contract negotiations this year.

A national problem

Unfunded teacher pension debt reached $499 billion in 2014—a $100 billion increase from two years prior, according to the January National Council on Teacher Quality (NCTQ) report “Doing the Math on Teacher Pensions.” Nationally, an average of 70 cents of every dollar contributed to state teacher pension systems goes toward just paying off the debt—not to future benefits.

Nationwide, it is uncommon for districts to pay the employee contribution, as Chicago Public Schools does, says Sandi Jacobs, vice president and managing director for state and district policy at the NCTQ.

“You absolutely feel for both sides,” Jacobs says. “On the one hand, the district can’t afford to keep doing that, and it’s not unreasonable to ask employees to contribute toward their own retirement. But if the teachers say if they start making that contribution it is equivalent to a pay cut, it is. It is really a quandary.”

District administrators should tell state policymakers how big a squeeze pension costs put on their budgets, while also being sensitive to teachers’ expectations, Jacobs says.

“As administrators talk about the need to make changes to the system, teachers are hearing heated rhetoric about people trying to take their pensions away—and nobody wants that,” Jacobs says. “But we have to have a system that we can afford and is sustainable and serves teachers well—and make sure that is part of the message.”