Mere months after passing the largest tax hike in modern Chicago history, Mayor Rahm Emanuel vows to hit residents with even higher property-tax bills, this time to bail out pension mismanagement by Chicago Public Schools officials – behavior tacitly endorsed by the Chicago Teachers Union.
Mayor Rahm Emanuel and the Chicago City Council on Oct. 28, 2015, passed a record property-tax and fee increase that will soak city residents with more than $700 million a year in new taxes and fees when fully rolled out in 2018.
But that wasn’t enough, according to city leadership.
Emanuel is pushing a property-tax hike approaching $200 million dedicated solely to teacher pensions.
The common chorus from Chicagoans: Will it ever be enough?
Chicago teacher pensions are flailing because of bad choices on the part of the Chicago Teachers Union, or CTU, and Chicago Public Schools, or CPS, officials. Now taxpayers are being asked to bail out pensions once more.
Chicago residents already pay far more in taxes and fees per person than residents of every other major city in Illinois. And Chicago city government has far more money to spend per person than any other major city government in Illinois.
The CPS tax hike wouldn’t have anything to do with the classroom. Instead, city taxpayers will be asked to pump more money into a teacher pension system that’s missing half the money it needs to fund teacher retirements.
A deeper dive into what caused that pension shortfall poses an important question: Should Chicagoans struggling to balance their own budgets be forced to bail out a corrupt system?
Teacher pensions used as political slush fund
A review of CPS finances over the past 20 years shows that revenues were never the issuewhen it came to teacher pensions. State and city taxpayers contributed more than enough to fund the system.
But city leaders, with the CTU’s consent, instead chose to siphon money away from the pension system and use it for other things – most notably, teacher pay increases averaging over 4 percent per year from 1998 to 2012.
These raises made Chicago teachers the highest-paid educators among the nation’s 10 largest school districts.
Now, the average career teacher at CPS can expect to receive more than $2 million in benefits after retirement, or $72,000 per year. Due to a deal made between CPS and CTU in 1981, teachers pay a mere 2 percent of their salaries toward these benefits. This perk, known as a “pension pickup,” has cost taxpayers nearly $1.3 billion since 2006.
Major reform needed
If Emanuel’s move for yet another major tax hike proves anything, it’s that hitting up Chicago families year after year for more revenue without any significant reform is a losing formula.
Ending pension pickups in CPS is a commonsense reform that is being seriously consideredby the school district and the CTU. Union members paying their fair share for generous retirement benefits is one of the steps needed to pull CPS back from the brink of bankruptcy. And given that CPS needs every penny it has just to meet its current payroll and pension costs, any talk of salary and pension increases should be off the table.
Opening up city contracts for renegotiation, right-sizing CPS payrolls, removing barriers to jobs growth in a flatlining city economy, and giving true security to new teachers in the form of 401(k)-style retirement plans are among the politically difficult but necessary changes Chicagoans deserve.
Chicago families who don’t rely on city paychecks have paid more than their fair share to keep the city and CPS afloat. It’s time Emanuel stop squeezing residents for new revenues and look to city payrolls and budgets for reform.
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