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House panel votes to allow CPS to short pension payments for next two years

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SPRINGFIELD-Against the will of Gov. Pat Quinn, an Illinois House committee Friday approved a measure to authorize Chicago Public Schools to short payments for two years to its severely underfunded pension system in order to avoid classroom cuts.

By a 6-4 vote along party lines, the House Personnel and Pensions Committee advanced a bill that its sponsor, Rep. Elaine Nekrtiz (D-Northbrook), called a way to give CPS "a little breathing room." The bill now moves to the House floor, and it will have to pass there and in the Senate before moving to Quinn's desk.

"This is a very difficult bill, and it's continuing sort of the bad practices of the past," Nekritz said. "I think we don't have any option on that, but it's on a path toward success."

Those bad practices Nekritz referred to include pension "holidays" taken not only by CPS in the past, but also by the state.

CPS contributed no money to the Chicago Teachers' Pension Fund from 1995 to 2005. As a result, its nearly 100-percent funded system dipped to a 54-percent funding level by 2012.

Under Nekrtiz's bill, partly negotiated by the Legislature's top two Democrats, the State Board of Education would have to contribute $200 million in fiscal year 2013, $350 million the next year and $500 million the year after that. The system would then be subject to a pension 'ramp' to require funding to make the system 90-percent funded by 2061.

Peter Rogers, CPS chief financial officer, could not predict how the inevitable hit to the system will affect its credit-rating but said "the anticipation of the rating agencies is high."

Rogers called possible property-tax increases "not something that breaks the bank" but said the pension "relief" is necessary for CPS to craft a budget by August before classes resume in September.

"If we don't do anything today, the budget of Chicago schools will be in chaos in August," he said.

Republicans on the committee, all of whom voted against the measure, were concerned this kind of move would put CPS in a crisis similar to the state's $97 billion pension shortfall.

"This has gotten the state in trouble, and it's going to get the city in trouble," Rep. David McSweeney (R-Barrington) said. "This is kicking the can down the road. We have an insolvent state. Insolvent. Now we're going to have an insolvent city. This is very disappointing."

Nekritz responded to what many will surely consider a hypocritical move by House Democrats.

"I understand that, but to me, what I'm looking at is the balance of paying pensions with the balance of educating children in the city of Chicago," she said. "And right now, I can't have both...And simply saying to the school children of Chicago, 'I'm sorry, we're going to cut your budget by 10 percent,' doesn't seem like very good balance to me."

Meanwhile, Gov. Quinn issued a statement saying he refuses to sign the measure until the Legislature "sends comprehensive public pension reform to my desk."

Asked if it's unfair for the governor to use CPS' plight as a bargaining chip, Nekritz said, "The governor has some very strong executive powers, and he's utilizing those. And it's what plenty of governors do. It isn't just Illinois."

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