Chicago’s pension system has taken another blow as unfavorable investment returns have driven the Chicago Teachers Pension Fund (CTPF) $1 billion deeper into debt.
According to the Chicago Tribune, the pension system for Chicago teachers is now facing an $11 billion shortfall in a time where state law requires the CTPF to be 90% funded by 2059. With no indication of where the money will come from other than tax hikes and budget cuts, the CTPF is in the same predicament as other Illinois pension funds that make up the state’s $130 billion shortfall.
“We are aware of our obligations, and we will continue to meet our obligations for all of the pensions. But I think the biggest plan is to continue to lobby for additional funding to support our schools,” Chicago Public Schools CEO Janice Jackson told the Tribune.
The CPS had previously arranged an agreement with the state that deferred its annual pension payments, but once the fund’s health waned due to the deal, the fund has had trouble maintaining its obligations. The Tribune reports that a $700 million-plus contribution to the fund was covered by short-term loans from the district last year. In addition to the loans, the state also agreed to cover about $550 million in CPS pension payments, which will cost the state $230 million per year.
However, Gov. Bruce Rauner’s spending plan could throw the state pension relief out the window, as it’s looking to cut the assistance. The CPS now projects an annual payment to the fund at nearly $1 billion, with only 50% of its benefit obligations able to be covered by its assets.
“What you’re going to end up doing is diverting money that was initially intended to be operating revenue to educate kids to pay for what you didn’t put into your pension system in the past,” Ralph Martire, executive director of the Center for Tax and Budget Accountability, told the Tribune. “That’s going to be what happens, because there’s no way out of making the pension payment. Our state constitution is very clear.”