* Eric Zorn looks at the history of employer contributions to teacher pension funds…
Chicago started its own teacher pension fund in 1895, and the non-Chicago statewide fund started in 1913. Then in 1939, the laws were overhauled, benefits were standardized and the Teachers’ Retirement System of the State of Illinois — the suburban and downstate program — was formalized.
Why didn’t the two systems just merge at that time?
“Because ours was older and much better funded,” said James F. Ward, 74, executive director of the Chicago Teachers’ Pension Fund from 1967 until 1997. And Chicago was able to strike a deal that funneled a fair share of state tax revenues into funding pensions for Chicago Public Schools.
That all changed in 1995 with the deal that ceded control of CPS to Mayor Richard M. Daley. Part of the arrangement called for the Chicago Board of Education to have the flexibility to mingle education funds with funds formerly earmarked only for pensions, Ward said.
Another part of the deal was that the state would try to kick 20 to 30 percent of overall teacher retirement-fund payments back to Chicago, kind of like in the old days. But this aspiration — this goal — has lately gone by the wayside as budgets have tightened.
In fiscal 1995, the first year of the deal, Chicago got 23.2 percent of the money that went to the Teachers’ Retirement Fund. Fair enough, or close to it.
By fiscal 2012, that figure had dropped to 0.4 percent — not quite nothing but almost — with Chicago getting shorted by roughly $540 million, according to Chicago Teachers’ Pension Fund estimates. And some of the local money formerly earmarked for pensions instead went to paying the ongoing costs of running city schools.