A look at the Chicago numbers
Monday, Jun 27, 2016 - Posted by Rich Miller
* Ralph Martire on the “blame Chicago” rhetoric…
The problem is the current rhetoric about the Chicago bailout, just like the vast majority of past attempts to pit downstate Illinois against Chicago, creates a false dichotomy that ultimately encourages legislation counter to the interests of downstate communities. Understanding why this is the case, requires an understanding of what the dreaded “Chicago bailout” actually entails. The key element of the proposal involves providing some financial support to Chicago Public Schools, by having the state cover all or a portion of the “normal pension cost” — that is, the employer cost of future retirement benefits — currently being earned by CPS teachers.
Many of you are probably wondering why state tax dollars collected everywhere from Rockford to Marion, should be used to cover the normal cost of pension benefits being earned by teachers in Chicago. Well, first and foremost, because Illinois already pays the normal cost of pension benefits earned by teachers in every school district statewide except Chicago. That’s right, CPS is the only school district that has to fund its own normal cost.
Of course, this also means Chicago taxpayers foot the full pension bill for CPS teachers, while also chipping in to cover a portion of the pension benefits being earned by teachers in Rockford, Marion, Winnetka — heck, you name it. And lest you think that contribution isn’t significant, Chicago residents alone account for roughly 20 percent of all income tax revenue collected statewide. So, the proposal isn’t so much a bailout — but rather an attempt to put CPS on equal footing with every other school district.
* Sun-Times today…
The Chicago Public Schools will make a $676 million payment to the Chicago Teachers Pension Fund due Thursday even though that massive payment will leave the nearly bankrupt school system with just $24 million in the bank — enough to cover just 1.5 days of payroll.
“Chicago Public Schools will make that pension payment. . . . In the last two years, the city of Chicago has made more pension payments to the Chicago Teachers Pension Fund than the preceding 15 years. Payments weren’t made by Springfield or anybody else, and that was wrong,” Mayor Rahm Emanuel said Monday.
Emanuel said CPS would “not have a financial challenge” if Chicago taxpayers were not paying twice — through property taxes for the pensions of their own teachers and through income taxes for the pensions of teachers outside the city.
* According to the governor’s budget office, the state’s pension contribution to the Downstate and suburban Teachers Retirement System is estimated at $3.743 billion this fiscal year. If the 20 percent number is accurate across the board, Chicagoans are paying roughly $749 million to the state to fund a pension system that doesn’t include their own teachers - on top of the $676 million payment they’re making Thursday for their own pension fund.
- Collectivist - Monday, Jun 27, 16 @ 4:14 pm:
Ralph is obviously a collectivist. It seems use of facts and reality are a dead give a way
- Thestatewe'rein - Monday, Jun 27, 16 @ 4:19 pm:
As a Chicago property tax payer, I would respectfully request that a rebate for my contribution to the statewide system be sent to CPS so my son can go to school this fall.
- Former State Employee - Monday, Jun 27, 16 @ 4:19 pm:
There are just too many folks confused by the facts.
- Muscular - Monday, Jun 27, 16 @ 4:20 pm:
Doesn’t the state also provide Chicago with a grant that other school districts do not receive?
- Chicago Taxpayer - Monday, Jun 27, 16 @ 4:21 pm:
Amen Ralph!
And his most important point is:
“The problem is the current rhetoric about the Chicago bailout, just like the vast majority of past attempts to pit downstate Illinois against Chicago, creates a false dichotomy that ultimately encourages legislation counter to the interests of downstate communities.”
On a per pupil basis, downstate communities are the biggest winners in the education reform bills passed by the House and Senate–the one Rauner decries as a “Chicago bailout.”
- Williamson County Resident - Monday, Jun 27, 16 @ 4:24 pm:
Rauner and his Raunerbots are, in their so typical fashion, pandering to the low information folks. Informed voters know better than to buy into all the Chicago bashing rhetoric nonsense.
- Yellow Dog Democrat - Monday, Jun 27, 16 @ 4:30 pm:
Where I come from, that is called “taxation without representation.”
The Illinois Tea Party must be outraged.
- Joe M - Monday, Jun 27, 16 @ 4:30 pm:
I don’t think my local downstate Republican state rep is aware of this information.
- Anon - Monday, Jun 27, 16 @ 4:32 pm:
No, no, no, no, no.
We will not be distracted by concepts like equity or facts. Chicago is bad and evil and we must be protected from it.
- Anonymous - Monday, Jun 27, 16 @ 4:32 pm:
Chicago cut its own deal to take over all aspects of CPS in the late 80s.Now it’s convenient to forget that. Martierre has to know this. Part of his plan to help education a few years back was a service tax…what ever happened to that idea ? doa in springfield ?
- Lucky Pierre - Monday, Jun 27, 16 @ 4:32 pm:
A little bit hard to believe that the current funding formula that was agreed to by the four most powerful democrats in the state who were all Chicago residents would harm Chicago.
- Juice - Monday, Jun 27, 16 @ 4:36 pm:
Lucky, I didn’t realize that Pate and Edgar were Chicago residents. Or Democrats.
- My New Handle - Monday, Jun 27, 16 @ 4:38 pm:
Why does Chicago have its own teachers pension? Why are Chicago teachers not part of the rest of the state’s TRS? Seriously, is there some history behind this separation?
- JS Mill - Monday, Jun 27, 16 @ 4:38 pm:
I have tremendous respect for Martire, those that disparage him usually do not dispute his numbers and neither do I.
What he is stating is not untrue in terms of the economic value of Chicago to the rest of Illinois. And while he is correct in the state does not make the CPS pension payment, I don’t believe that he is calculating the total dollars sent to CPS from the ISBE. That said, I believe CPS, and the rest of the state, need better education funding from the state to reduce dependence on property taxes.
The “$3.743 billion this fiscal year” for TRS pension funding that the Sun Times uses actually is about $2.3 billion toward the debt. That is money that was spent all across Illinois on any variety of projects and programs. That money was diverted/borrowed/stolen from the pensions. Not the same thing as the annual cost of TRS pensions, which is far less at about $1.4-$1.5 billion. Big difference.
- blue dog dem - Monday, Jun 27, 16 @ 4:40 pm:
….the nearly bankrupt school system? Does anyone out there really believe that a reformulation of school funding will be the long term fix for CPS? Regretably the comment at 4:32
Has some validity.
- Rich Miller - Monday, Jun 27, 16 @ 4:40 pm:
=== Big difference. ===
Meh. It’s awful real money right now.
- Downstate Illinois - Monday, Jun 27, 16 @ 4:45 pm:
I’ll support the state funding Chicago’s share of its public pensions when 1) they stop paying property taxes at 1/6 assessed valuation and start paying at 1/3rd like the rest of the state.
2) When Chicago and downstate schools operate under the same school code, which means no more “hold harmless” when the enrollment of the city schools decline in part of the terrible system that’s known as the Chicago Public Schools.
- Formerly Known As... - Monday, Jun 27, 16 @ 4:46 pm:
The nation spends an average of $10,700 per pupil for K-12. Instruction spending averages $6,480 per pupil.
Illinois spends an average of $12,521 per pupil for K-12. Instruction spending averages $7,419 per pupil.
CPS spends an average of $15,120 per pupil for K-12. Instruction spending averages $9,778 per pupil. Germantown SD 60 spends an average of $6,037 per pupil for K-12, the lowest in the state. Instructional spending averages $3,981 per pupil. There are differences in living costs, but it is easy to understand the frustration in central and southern areas when gaps between the haves and have nots are so staggering.
- CapnCrunch - Monday, Jun 27, 16 @ 4:46 pm:
I would like to hear the answers to the questions posed by -My New Handle-. Seems like there is something missing here.
- Oswego Willy - Monday, Jun 27, 16 @ 4:46 pm:
- My New Handle -
===Why does Chicago have its own teachers pension? Why are Chicago teachers not part of the rest of the state’s TRS? Seriously, is there some history behind this separation?===
Try the Google Key. It knows a lot.
===Lucky, I didn’t realize that Pate and Edgar were Chicago residents. Or Democrats.===
Shhh, - Juice -, you’ll ruin - Lucky Pierre -’s day..,
- Arthur Andersen - Monday, Jun 27, 16 @ 4:48 pm:
JSM, I agree with you 100 percent. You may be a tad high on normal cost, but I’m not close to where all my pension stuff is so I can’t check it.
Handle, Chicago has a handful of its own funds for teachers, city employees, laborers as well as the customary police/fire funds. In the case of teachers, Chicago’s fund was established before Downstate’s-not sure about the others and why they’re not in IMRF. Local control, I would imagine.
- Federalist - Monday, Jun 27, 16 @ 4:49 pm:
Why did the CPS agree to this supposed economic injustice in the first place?
What’s the background on this complicated matter?
I do not know and certainly the information provided seems not to address this.
If anyone really has some solid insight let me know.
- Amalia - Monday, Jun 27, 16 @ 4:51 pm:
Ralph is always interesting. Is he still on a suburban school board?
- 47th Ward - Monday, Jun 27, 16 @ 4:51 pm:
Where I come from, this is called “let’s you and him fight.”
- TinyDancer(FKA Sue) - Monday, Jun 27, 16 @ 4:55 pm:
=Chicago cut its own deal to take over all aspects of CPS in the late 80s.=
Uh, no - in 1995 the Republican governor and GA gave control of CPS to the mayor.
And what does that have to do with equitable state funding?
The city didn’t secede.
- Formerly Known As... - Monday, Jun 27, 16 @ 4:57 pm:
=Doesn’t the state also provide Chicago with a grant that other school districts do not receive?=
That is called Block Grant funding, and it began in 1995.
According to CPS, =In FY 16, CPS Block Grant revenue will increase by $21 million over FY 15 projected end of year revenue, for a total of $597 million.=
- JS Mill - Monday, Jun 27, 16 @ 5:00 pm:
=Meh. It’s awful real money right now.=
Rich, respectfully I understand the real money aspect, but the fact is that the money was not used for pensions. That is indisputable. Love pensions or hate them that is the truth. This is now a past debt that they have decided to turn into a political issue (it was already a fiscal issue). I see it as a meaningful differentiation.
@AA- yeah, the annual cost of TRS was a range based on what I have heard so it is probably off given the annual cost continues to decrease due to Tier II.
@Federalist- I am not sure if there is a single reason for the decision to allow CPS essentially break from the ISBE. It did allow Daley to buy a lot of labor peace by diverting pension funds to salaries at the same time he was also able to start the charter school movement in the city. CTU allowed themselves to be bought off as those charter schools are non-union.
- cdog - Monday, Jun 27, 16 @ 5:04 pm:
Pension parity is a reasonable expectation.
It boggles the mind to listen to someone deny this, day after day.
- gg - Monday, Jun 27, 16 @ 5:12 pm:
Ralph M is on the Board of Directors of River Forest District 90 (K - 12).
The state dollar contribution is small because the local real estate tax contribution is large.
His no dog in this fight is well fed locally.
No reason for him to take sides.
- gg - Monday, Jun 27, 16 @ 5:15 pm:
Sorry K - 8.
Lots of expensive real estate.
About 1,100 students that score high academically.
- Macbeth - Monday, Jun 27, 16 @ 5:18 pm:
I assume these are collectivist statistics. Obviously.
Rauner’s real statistics are in his head. Because that’s where they are.
- illinois bob - Monday, Jun 27, 16 @ 5:24 pm:
@gg
=His no dog in this fight is well fed locally.
No reason for him to take sides.=
That’s what he does for a LIVING, gg. His CBTA is almost fully funded by teacher’s unions and Dems. They pay him to do this, and he does it well if not honestly.
- JackD - Monday, Jun 27, 16 @ 5:29 pm:
Given the “block grant” referred to by Formerly Known As, are the state’s payments to the city and the rest of the state equivalent?
- Cassandra - Monday, Jun 27, 16 @ 5:37 pm:
If there is nearly 600k in block grant funding to Chicago it is rarely mentioned in discussions of this pension funding parity issue. Block grant funding may not go to pensions, but as part of the total school pot, in our efforts to equalize education monies, shouldn’t it be part of the equity discussion. As comparative rates of property taxation should be. Even after the recent property tax hike, I believe Chicagoans still pay significantly lower property taxes on similar value properties than in other parts of the state.
We may be low information voters out here in the middle class but some questions are seeping through, as both parties seek more of our money through the state’s regressive income tax system.
- Anonymous - Monday, Jun 27, 16 @ 5:38 pm:
Can somebody explain the history of why CPS is paying the pension costs for its teachers and the rest of the state isn’t?
- City Zen - Monday, Jun 27, 16 @ 5:38 pm:
==Given the “block grant” referred to by Formerly Known As, are the state’s payments to the city and the rest of the state equivalent?==
According to state republicans, no:
http://www.senategop.state.il.us/Portals/0/Docs/Cost-Shift-FINAL.pdf?timestamp=1409174250732
- Chris - Monday, Jun 27, 16 @ 5:42 pm:
Downstate: “paying property taxes at 1/6 assessed valuation and start paying at 1/3rd like the rest of the state.”
That’s just not how it works in Cook. The system is totally different, and even separate from your misunderstanding of how property taxes are levied on Cook county, your mistaken belief is based on almost decade out of date info about how assessed values are determined.
- Formerly Known As... - Monday, Jun 27, 16 @ 5:43 pm:
My New Handle - The Chicago Teachers Pension Fund was established on July 1 1895 and is one of the oldest in America. TRS wasn’t formed until 1915, and Social Security even later.
There was no benefit in 1915 for the Chicago Teachers Pension Fund to merge with a system like TRS, because at the time TRS was actually the newer and less-proven retirement plan compared to theirs.
- Anonymous - Monday, Jun 27, 16 @ 5:51 pm:
@ Illinois Bob
Point well taken.
According to a blog called Citizen vs. Machine CTBA receives over 700K from various Unions and union PAC’s.
I did not know that.
But next to Rauner, Griffen, et al. 700K is a drop in the bucket.
The fact that government needs to be funded is denied by the wealthy.
Per the blog …”The dependence on union funding makes the CTBA the de-facto financial think-tank of the public sector unions and reveals a undeniably heavy bias towards policies that benefit those unions. In a nutshell, these unions, entirely dependent on tax revenue for their survival, pay Mr. Martire to produce reports calling for higher taxes.”
I call the financial facts MATH.
- Steve Schnorf - Monday, Jun 27, 16 @ 5:56 pm:
Bob, once again you make a serious charge without being specific. Please tell me with some specificity how Martire is not honest.
- DuPage Dave - Monday, Jun 27, 16 @ 6:06 pm:
Give Rauner credit for giving new energy to the Chicago versus everybody else argument. It’s always there at some level in Illinois politics, but he’s brought it back to a new, dirty level. Crumbling prisons, indeed.
- wordslinger - Monday, Jun 27, 16 @ 7:09 pm:
– There are differences in living costs, but it is easy to understand the frustration in central and southern areas when gaps between the haves and have nots are so staggering. –
“Staggering” is the key word here. It’s Monday, pace yourself.
Those in “central and southern areas,” as you put it, are frustrated that Chicago taxpayers are funding their teachers’ pensions, while they do not contribute a dime to Chicago teachers pensions?
What, exactly, are they frustrated about? That sounds like a sweet deal.
- foster brooks - Monday, Jun 27, 16 @ 7:11 pm:
I want my property assessed just like Chicago taxpayers
- Shemp - Monday, Jun 27, 16 @ 9:50 pm:
Thanks for actually providing an answer, “Formerly known as.”
- Federalist - Monday, Jun 27, 16 @ 9:51 pm:
- Anonymous - Monday, Jun 27, 16 @ 5:38 pm:
Can somebody explain the history of why CPS is paying the pension costs for its teachers and the rest of the state isn’t?
Well, can anybody explain it?
- dog lover - Tuesday, Jun 28, 16 @ 7:54 am:
Does Chicago pay both employer and employee portions of the pension contributions? My downstate school district does…at my expense. I pay my employee portion to SURS.
- Chris - Tuesday, Jun 28, 16 @ 12:35 pm:
“I want my property assessed just like Chicago taxpayers”
If every parcel in cook county had its assessment tripled tomorrow, no ones tax bill would change by a dime.
You need to understand how property taxation works in Cook County before getting all worked up about it; it is aTOTALLY different system.