Sign up for Chalkbeat Chicago’s free daily newsletter to keep up with the latest news on Chicago Public Schools.
Chicago Public Schools officials are voicing concern about a pair of bills targeting pension costs for employees, particularly one that would force the district to take on a controversial payment into a municipal retirement fund.
But the Chicago state lawmaker who introduced the proposals says the bills are simply “placeholders” meant to spur conversations between district, city, and state officials.
One of the bills authored by Sen. Robert Martwick, a Democrat, would compel the district to start paying into a city pension fund that covers Chicago Public Schools support staff as well as city employees. Chicago Mayor Brandon Johnson has pressed CPS to foot these costs — an issue that contributed to the firing of the district’s former CEO and bitterly divided its partly elected school board.
Martwick’s other bill would shift all costs of paying into the district’s separate teacher pension fund from CPS to the state — a move he acknowledged is a long shot this year. District leaders have long decried that Illinois largely covers teacher pensions in all school districts except Chicago, where it pays for roughly a third of these costs.
In a statement, the district said the proposals could put CPS in a bind. Given its own deficit and significant federal funding cuts, it’s unlikely the state would take on CPS’s teacher pension costs during this election year. Meanwhile, the municipal fund proposal would saddle the district with “an unfunded mandate that CPS simply cannot afford” as it faces a deficit of more than half a billion dollars. Taking out a loan and adding to the district’s huge debt burden to make the recurring payment is not a solution, the statement said, as officials have insisted in the past.
“Without a corresponding increase in state or local funding, this shift would force a choice between pension payments and student education,” the district’s statement said.
In an interview, Martwick, a Chicago Teachers Union ally and an architect of the city’s transition from mayoral control to an elected school board, said the city and the district must disentangle their finances before that board is seated in January. His bill is meant to spur them to figure out how to do that, he said.
Bills are meant to start pension conversations, author says
Meanwhile, a larger role for the state in footing Chicago’s teacher pension costs is “the right thing to do,” he said, and his bill will keep that request in the foreground as some lawmakers press for an influx of new revenue for education.
“There are no easy answers here; there’s no way to make the pension debt magically go away,” he said. “These decisions are challenging, but for the good of the students and taxpayers, they must be made.”
Joe Ferguson of the Civic Federation, a Chicago-based nonpartisan fiscal watchdog group, said he agrees that the city and district must have a conversation about handling the municipal pension fund costs going forward. But he said Martwick’s proposal gives the city an edge at a time the district is especially “fiscally fragile.”
“The larger problem is that there aren’t meaningful, collaborative discussions between the city and CPS,” he said. “Instead, we have a piece of legislation that says nothing about where the money would come from, which is how the city has been approaching this issue.”
If both bills were to become law, the district would come out ahead. It’s somewhat unclear what the cost of the district’s annual payment into the city’s Municipal Employees’ Annuity and Benefit Fund would be. In its statement, the district suggested the payment would be $175 million to $200 million, but a recent budget presentation by the mayor’s office to local school council members estimated it at $346 million.
CPS’ costs for its teacher pension fund came to about $660 million in this year’s budget, most of it covered from a dedicated pension property tax levy but some coming from its operating revenues.
Chicago school board members in October unanimously backed a $175 million reimbursement to the city’s pension fund — but only after Johnson steered a record amount of special tax dollars to CPS to cover the payment and other costs. Earlier in the fall, a majority on the board had defied the mayor and voted for a district budget that didn’t include that payment, only committing to make it if an influx of new revenue materialized.
The mayor and board members aligned with him and with the teachers union, his former employer, have said taking on the pension payment permanently would help the district separate its finances from those of the city as CPS transitions to a fully elected school board. They have said the district must chip in for its own employees’ pension costs in a move that will ensure a collaborative relationship with the city.
But school board members who pushed back against including the payment in the budget last fall noted that under state law, the city is on the hook for those costs — and passing them on to the district would mean painful cuts that would affect the classroom. They balked at the idea of taking out a high-cost loan to make the reimbursement, noting the district already wrestles with staggering debt service costs.
The district said shifting the municipal pension fund costs onto CPS without new revenue would queue up an “immediate fiscal crisis” for the new fully elected school board in early 2027. It said the district needs a comprehensive solution to its pension issues in collaboration with the city and the state.
One idea from CPS? The state could take on more of the district’s teacher pension costs, and CPS could use some of the pension property tax dollars freed up as a result to pay into the municipal retirement fund.
The proposals have murky prospects in Springfield
Martwick said his bills are works in progress that “involved no input from anyone,” and he said the exact cost of the municipal pension payment CPS would have to take on under one of them is still being clarified. He had no intention of giving the city an advantage in such a conversation, Martwick said. As a resident and father of CPS students, he said it’s important the district tackle the task of separating their finances from those of the city with a sense of urgency.
“It almost sounds like they’re saying, ‘No, no, no, let’s stay entangled,’” he said. “CPS needs to grasp that this disentanglement is real.”
He said he introduced the bills against the backdrop of a larger push by Illinois progressives to pursue new revenue for the state, such as raising taxes on wealthy residents. If that push works, he said, he wants CPS teacher pensions to be on the list of things the state could start funding.
A couple of Chicagoland state lawmakers recently introduced a CTU-backed bill to fully fund the state’s “evidence-based” school funding formula and cover some mandated services, such as transportation for students with disabilities.
CPS officials have voiced an interest in consolidating the Chicago Teachers’ Pension Fund with that of the Illinois Teachers’ Retirement System, which covers educators outside of Chicago — a move that they say could save CPS big. But the teachers union has opposed the idea.
Hal Woods of the advocacy group Kids First Chicago said he sees both Martwick bills as “conversation starters” with murky prospects of passage this spring. The two proposals amount to “a grand bargain,” he said, in which the district can use money freed up by passing on teacher pension costs to the state to make the city payments covering support staff pensions. The catch? There’s nothing in it for the state.
Woods said he didn’t think Martwick would push for the city fund bill in isolation, noting it would swell the district’s deficit to almost $1 billion and almost certainly lead to disruptive classroom cuts without an unexpected influx in revenue.
“I don’t think he would stick CPS with a $346 million bill and no way to pay for it,” Woods said.
Mila Koumpilova is Chalkbeat Chicago’s senior reporter covering Chicago Public Schools. Contact Mila at mkoumpilova@chalkbeat.org.
