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20 years of diversions cost pension fund $3.2 billion

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Illinois

* Twenty years ago, the General Assembly (then in GOP hands) and Gov. Jim Edgar gave Mayor Daley a gift. Buried deep within a big school reform bill which gave Daley pretty much complete control of the school system was a nice little sweetener that keeps on “giving” to this very day. From a press release…

The Chicago Teachers’ Pension Fund (CTPF), the Retired Teachers Association of Chicago (RTAC), the Chicago Principals and Administrators Association (CPAA), and the Chicago Teachers Union (CTU) announced their support for House Bill 3695, a measure which reinstates the pension tax levy diverted from CTPF in 1995. […]

The proposal reestablishes a specific tax levy for contributions to CTPF beginning in Fiscal Year 2016. In 1995, legislation diverted the CTPF tax levy into the CPS operating budget, giving CPS administrators control over pension contributions. CPS then deferred their contributions from 1996 to 2005. As a result, CTPF lost $2 billion in revenue. CPS again deferred contributions from 2010 to 2013 and cost the fund another $1.2 billion. In total, CTPF has foregone more than $3.2 billion in funding.

The bill restores the tax levy, equal to 0.26% of all taxable property within the Chicago Public Schools district, and would generate approximately $160 to $180 million in 2016. The bill does not increase taxes, but reduces the CPS levy from 3.07% to 2.81% to fund pensions. The 0.26% of tax levied each year will be deposited directly with CTPF.

* Rep. Barbara Flynn Currie strongly objected when that bill was passed in 1995…

And, yet, $3.2 billion in diversions later, nobody has ever bothered to repeal it. Indeed, it was apparently renewed four years after it first passed - under a Democratic House while Rep. Currie was Majority Leader.

posted by Rich Miller
Friday, May 15, 15 @ 1:50 pm

Comments

Twenty years ago…

Please, no Democrats did this, Rauner is trying to solve it. Please.

It’s up to Rauner to get the votes. It’s his job;

Propose, then get action. Rauner loves to propose things, so propose already and get that Cracker Jack legislative team movin’

Jim Edgar endorsed Rauner too.

You’re welcome.

Comment by Oswego Willy Friday, May 15, 15 @ 1:54 pm
If you consider the investment returns that could have come from just the $2 billion of that $3.2 billion, there is a lot more lost to the pension fund.

Comment by Precinct Captain Friday, May 15, 15 @ 1:55 pm
So why not repeal it now?

LOL!

Comment by Leroy Friday, May 15, 15 @ 2:01 pm
Dawn Clark Netsch was running against Edgar and proposed a tax increase from 3% to 4.25% to fund the budget deficit.

Edgar’s Chief of Staff and Campaign manager had his wife’s boss introduce this ill advised myopic legislation and it became law.

Comment by Chicago 20 Friday, May 15, 15 @ 2:07 pm
Edgar was really big on creating problems that would come to fruition long after he retired and the myth of him being a good governor had been established. In reality he was a top knot he can kicker like his predecessor.

Comment by Anonymous Friday, May 15, 15 @ 2:08 pm
Can’t we just send the bill to Mayor Daley and garnish his wages until it’s paid back? If anyone still believed he was a good mayor, this should put that lie to bed.

Comment by 47th Ward Friday, May 15, 15 @ 2:26 pm
Maybe the Illinois Green Party’s time has come.

Comment by Honeybear Friday, May 15, 15 @ 2:34 pm
Wait a minute. All of this is true. It’s also true that CTPF and their Democratic allies lobbied for and received an annual $65 million GRF State approp to CTPF starting in about FY96. This was based on language in the “Edgar ramp bill” that said something to the effect of “CTPF should get 20-30 percent of what TRS gets” but with no funding, calculation or enforcement process.

There was also some controversy about CTPF using the State money to subsidize retiree healthcare instead of paying pensions iirc.

More to the story, folks.

Comment by Arthur Andersen Friday, May 15, 15 @ 2:36 pm
” Arthur Andersen - Friday, May 15, 15 @ 2:36 pm: More to the story, folks. ”
Where can we find the rest of the story?
Thank you

Comment by Mama Friday, May 15, 15 @ 2:50 pm
Try the Google, Mama.

Comment by Arthur Andersen Friday, May 15, 15 @ 3:02 pm
Nice little Easter egg buried in that bill.

Comment by RNUG Friday, May 15, 15 @ 3:06 pm
This was a Daley initiative aided an d abetted by the Republicans. Daley is now a a “distinguished” fellow at the University of Chicago Harris School of Public Policy. I guess what distinguishes him is the mountain of debt he left for the City

Comment by Anonymous Friday, May 15, 15 @ 4:07 pm
One more example of delayed ‘gratification.’

The motto being let tomorrows taxpayers worry about it.

Comment by Federalist Friday, May 15, 15 @ 5:16 pm
Thanks, boomers!

Comment by Michael Feltes Friday, May 15, 15 @ 5:23 pm