Published Online: January 31, 2006
Published in Print: February 1, 2006, as Pension Payment Debated in Chicago

District Dossier

Pension Payment Debated in Chicago

District seeking break on its contributions.

Faced with one of its biggest budget deficits in 10 years, the Chicago school district wants to reduce contributions to its teacher pension fund.

In an annual speech to a civic group, Chicago schools Chief Executive Officer Arne Duncan said last week he would seek a waiver of state law to allow the district to keep the $10.5 billion pension fund financed at 80 percent of its liabilities, rather than the required 90 percent.

That’s just one of the measures under consideration to deal with a projected $328 million deficit anticipated for the $4.2 billion fiscal 2007 budget.

Mr. Duncan is considering cutting into administrative, custodial, transportation, and food-service functions. Reading and mathematics tutors and Renaissance 2010, the effort to replace underperforming schools with smaller, better schools, could be trimmed. Declining enrollment and rising costs are among the factors driving the deficit, officials said.

“People need to understand,” Mr. Duncan told The Chicago Tribune, “that if we don’t get more money, kids will get hurt.”

Illinois Gov. Rod Blagojevich, a Democrat, responded by boosting Chicago’s education allotment in his proposed state budget from $70 million to $100 million. But district officials said cuts still must be made.


The Chicago Teachers Union decried the pension-fund proposal, arguing that the district should have better managed the money collected from a property-tax levy earmarked exclusively for the fund since the mid-1940s.

“We think it’s fiscally irresponsible,” said Rosemaria Genova, a spokeswoman for the 26,000-member American Federation of Teachers affiliate. “There are 108 departments the district can look to for cuts before it makes them on the backs of members and students.”

When the Illinois legislature gave Mayor Richard M. Daley control of the Chicago schools in 1995, it consolidated the pension levy with several other levies and allowed the district to use that money for operations. The schools “have been scraping for every operational penny,” said district spokesman Michael Vaughn.

But the district is obligated to make contributions to the fund if it dips below 90 percent. That happened in 2005, putting the district on a yearly payment schedule. Now it faces a projected $70 million contribution in 2007.

Vol. 25, Issue 21, Page 5

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