Chicago Fires 1,400 Teachers To Fund Extravagant Pensions

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Blake Neff Reporter
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About 1,400 Chicago public school teachers and staff are expected to lose their jobs in order to finance a pension debt of $634 million, the city announced Wednesday.

The layoffs are part of an aggressive $200 million budget cut to help finance the pension payment, which is required of Chicago Public Schools by Illinois law. The rest of the pension payment is coming from heavy borrowing, as the district already has a massive $1.1 billion budget deficit.

In announcing the layoffs, Mayor Rahm Emanuel blamed the rest of the state for not picking up the slack, saying the rest of Illinois doesn’t pay its fair share for pensions.

“You negotiate with your teachers in Aurora… Then we get to pay for it,” Emanuel said at a press conference. He said the state should change its funding formula so “You… come to the table and start paying your share for what you negotiated.”

But lawmakers in Springfield failed to act, leaving “unconscionable” cuts as the only option, he said.

Chicago’s public schools have seen repeated mass layoffs in recent years thanks to a budget situation that is in perpetual crisis. In 2014, about 1,100 employees were laid off, and over 3,000 lost their jobs in 2013. (RELATED: Chicago Public Schools Whack 1,000 Employees)

Still, the Chicago Teachers Union (CTU) released a statement saying it was totally “blindsided” by the mass firing, and accusing city officials of trying to “retaliate” against them for a recent breakdown in contract negotiations.

“These layoffs prove that the Board never intended to make the pension payment in good faith and that they are using this to justify more attacks on our classrooms,” said CTU president Karen Lewis. “Putting 1,400 people out of work is no way to balance a budget and resource our schools. This is going to hurt our students and the most vulnerable children in our district.”

Angry educators, though, might consider pointing a finger at the pension benefits received by their retired colleagues. Thousands of retired Illinois teachers receive a six-figure pension, and the typical teacher received more in pension payments than they personally paid in within 20 months of retirement. Most teachers retire at age 59 or younger, and the lifetime pension cost per teacher in the state is estimated to exceed $2 million. Not helping things for the state is an annual 3 percent cost of living adjustment that is fully guaranteed and totally untethered from actual inflation rates.

Chicago teachers have defended their high pensions by pointing out that by virtue of their participation they are ineligible for Social Security, though this non-participation means they also pay no payroll taxes.

In 2013, Illinois lawmakers passed a pension reform bill that tried to scale back benefits to contain costs, but CTU and other labor groups sued. In May, a state judge ruled that it was unconstitutional for Illinois to make any cuts whatsoever to negotiated pension payments.

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