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CHICAGO
TEACHERS NO LONGER CAN SAVE 40 SICK DAYS FOR RETIREMENT: NOW IT’S 244
Illinois Policy Institute/
Vincent Caruso
Pension benefits consume 25% of Chicago
Public Schools’ budget. The new Chicago Teachers Union contract
increases bankable sick days six-fold, increasing pension costs and
taking more from classrooms.
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 The Chicago Teachers Union ended an 11-day walkout after reaching an agreement
with Mayor Lori Lightfoot that’s poised to cost a total of at least $627 million
during the next five years.
The tentative contract struck Oct. 31 includes a number of CTU’s compensation
and staffing demands, while denying the union other top wishes such as
affordable housing provisions, increased preparation time and a three-year
contract. The deal will cost taxpayers at least $114 million in its first year.
But one detail that didn’t make headlines will hurt students and cost taxpayers
for years: Unused sick days that can be traded for pension credit went from 40
days up to 244 days. That move will either boost teacher pensions or allow staff
to retire earlier.
The sick day change will further undermine an already unsustainable pension
system. With an average retirement age of 55, most CPS teachers contribute less
than 2% of their salary toward their own retirements. The average Chicago
teacher earns back those contributions only five months into retirement. The
remainder of their lifetime pension benefits is largely billed to taxpayers,
most of whom must contribute far more and receive far less from their own
retirement funds.
CPS pensioners collect annual pensions worth up to 75% of their final career
salary. Educators who enrolled in the Chicago Teacher’s Pension Fund prior to
2011 earn a 3% pension increase that compounds every year, meaning within 25
years those pensioners will be collecting double what they received in their
first year of retirement.
Some political leaders disingenuously call those automatic raises a
“cost-of-living adjustment,” or COLA, a term typically applied to accrual growth
tied to the rate of inflation. The raises have far outpaced inflation.
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High-and-rising pension costs have strained CPS
teachers’ pension system, commanding a growing share of scarce
education funding dollars and threatening the retirement security of
younger teachers. The Chicago Teachers’ Pension Fund’s more than $13
billion in debt is highest among the eight city-related retirement
systems. Despite saddling Chicagoans with a property tax burden that
ranks among the highest in the nation, the teachers’ pension system
is only 45% funded.
Pension experts consider a funding ratio of less than 60% to be
“deeply troubled,” while a 40% funding ratio may be a “point of no
return.” If the Chicago system’s funding level slides just slightly
farther into the red, it might never be able to pay off its debts
without structural changes, painful layoffs or service cuts.
One prominent picket sign during the CTU strike read “where are the
funds?” The answer: pensions. Despite the state increasing its
funding to CPS by $291 million – not the $1 billion erroneously
reported by CTU – the pension system’s unsustainable demands consume
a growing share of that state funding.
Of course, the new sick day provision is just one way in which the
contract will strain the teachers’ pension system. The $62 million
in automatic salary increases, on top of $5 million in salary
increases for senior-level teachers, will mean higher pension
benefits and greater strain on the underfunded system.
The students may be back in school, but the fiscal security that can
keep them there remains threatened and taxpayers face greater
uncertainty from unaffordable pension costs and the dysfunction that
comes with it.
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