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* Ouch…
Rahm: create one pension fund for all teachers in Illinois.
— Mark Brown (@MarkBrownCST) July 1, 2015
Interesting note on combining teacher pension funds: Chicago teachers fund in better shape than state teachers.
— Mark Brown (@MarkBrownCST) July 1, 2015
He’s right. The Illinois Teachers Retirement System’s unfunded liability ratio is 59.4 percent. That number is 48.5 percent for the CTPF.
posted by Rich Miller
Thursday, Jul 2, 15 @ 9:37 am
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I think it’s much more likely that all school districts will soon be paying much more toward their pension liability.
Comment by Wordslinger Thursday, Jul 2, 15 @ 9:40 am
But how can Rahm borrow from TRS?
Comment by A Jack Thursday, Jul 2, 15 @ 9:44 am
I think that the one thing that Rauner and Madigan will eventually agree to do is the exact opposite and will make local school boards take on more of the pension costs for their teachers.
Teachers ARE NOT state employees.
Comment by Cassiopeia Thursday, Jul 2, 15 @ 9:44 am
The funded ratio figures are incorrect. As of the end of FY2014 (latest data available) TRS is 40.6% funded and CTPF is 51.5%
Sources: http://trs.illinois.gov/pubs/cafr/FY2014/fy14.pdf; http://www.ctpf.org/general_info/Financial_lists.htm
Comment by PensionResearcher Thursday, Jul 2, 15 @ 9:47 am
For years a number of politicians in Springfield have been talking about pension shifts for TRS and SURS - back to their actual employers. However, this CTPF shift idea is about shifting in the opposite direction. Interesting to say the least.
Comment by Joe M Thursday, Jul 2, 15 @ 9:47 am
Not to nit-pick Rich, but the CTPF number is the 2013 number. It’s actually slightly better from 2014 at 49%.
http://ctpf.org/general_info/Financial_lists.htm
Comment by Juice Thursday, Jul 2, 15 @ 9:48 am
Well…that’s awkward.
Comment by Juice Thursday, Jul 2, 15 @ 9:48 am
Funded ratio is based on assumptions and the assumptions in CTPF are far different than TRS. It is not an apples to apples comparison.
Comment by Fiscal Cliff Huxtable Thursday, Jul 2, 15 @ 9:49 am
Why not combine the trib and times. Both nosediving circulation, just think how many writers could be cut just think of the $avings.
Comment by jimk849 Thursday, Jul 2, 15 @ 9:54 am
Adding more liability to the state’s pension system right now?
What Wordslinger and Cassiopeia said.
Comment by Formerly Known As... Thursday, Jul 2, 15 @ 9:55 am
What if I told you Rahm’s new pension proposal would funnel teachers retirement savings into a fund managed by some of his top campaign contributors? You wouldn’t believe me, right? You would understand why this was important, right? You wouldn’t care, right? Ok.
Comment by William j Kelly Thursday, Jul 2, 15 @ 9:59 am
That might be the deal. The City is aware that their school system can no longer support itself, let alone their retirement and pension fund. One of the ways Chicago has survived over the decades is by spinning off costs of providing the City services that are too expensive for it to maintain alone.
So, I believe it is in the City’s interest to have the GA rewrite the law so that the Chicago school retirement and pension fund will be taken over by the State fund.
CPS does not have a bright future. The Mayor has been closing schools as families have moved out of the City. CPS is in the process of becoming smaller and yet serving a poorer City. Chicago cannot afford their teacher’s retirement fund.
It makes sense actually.
Comment by VanillaMan Thursday, Jul 2, 15 @ 10:05 am
@Word and @Cass - Agreed. If the local school districts were on the hook for these pension costs from the beginning, we probably wouldn’t have had the “2X20″ salary retirement spikes - increasing retiring certified salaries 20% for each of the last two years of employment - as my district wrote into their budgets for years. And since my districts has one of the highest teacher salaries in the state, that means folks downstate were forced to pay more than their fair share to fund those retirements.
Comment by nixit71 Thursday, Jul 2, 15 @ 10:13 am
Back in the day when Chicago was allowed to take over CPS’ pension fund, the State school aid formula was changed to help Chicago out on the pension payments.
Let’s find out just how serious Rahm is. Have the State take it over and cut the State Aid to Chicago schools by the amount required for the pensions, both the normal cost and the debt repayment.
Bet he won’t take that deal …
Comment by RNUG Thursday, Jul 2, 15 @ 10:16 am
Why stop at combining retirement funds? Why not revise the Illinois School Code so that Chicago has to operate like ALL other state school districts? The separation is overt; the School Code is very specific in identifying Chicago as separate from the rest of the state.
Comment by Buzzie Thursday, Jul 2, 15 @ 10:17 am
Not so fast, Rahm. I could see merging them GOING FORWARD into TRS as long as the money each CPS teacher has paid in (including the portion CPS put in as part of a wage deal) goes to TRS as well. That means paying up all monies owed. Otherwise it is just a transfer of debt from Chicago to the State.
Comment by DuPage Thursday, Jul 2, 15 @ 10:19 am
=The Illinois Teachers Retirement System’s unfunded liability ratio is 59.4 percent. That number is 48.5 percent for the CTPF.=
If these numbers are accurate it means the state fund is in better shape than the city fund.
Comment by chi Thursday, Jul 2, 15 @ 10:21 am
@VanillaMan - If you were TRS (or the state), would you want to acquire CPS/CTPF? If CPS enrollment is in decline, that means the worker-to-retiree ratio is only going to get worse…meaning less current teacher contributions to pay out retiree withdrawals…meaning the normal cost for pensions is only going to rise.
I see CPS pensions becoming more and more expensive and, therefore, a riskier “investment”. I’m not sure the marginal overall funding difference is worth the added risk to the state taxpayers.
Comment by nixit71 Thursday, Jul 2, 15 @ 10:22 am
@RNUG - Absolutely right. Rahm wants to offload his pensions onto the state yet continues to ignore the inequities in overall education funding Chicago receives in its favor. That trade-off would work against Chicago.
Comment by nixit71 Thursday, Jul 2, 15 @ 10:26 am
I would go a step further and consolidate all of the local pension funds.
Comment by Juvenal Thursday, Jul 2, 15 @ 10:38 am
I would assume that a common actuarial study would be performed using the same actuarial assumptions and smoothing techniques. I would also assume that the benefits would be standardized between the funds.
If those things happen and each pays into the fund the proportionate amount, why not merge them?
Comment by Jake From Elwood Thursday, Jul 2, 15 @ 10:38 am
If you were TRS (or the state), would you want to acquire CPS/CTPF?
Only for the right price.
Comment by VanillaMan Thursday, Jul 2, 15 @ 10:43 am
Don’t like the statement that teachers must pay more toward THEIR pension debt. Teachers played no part in creating this debt. The money intended for their retirement was taken away from them and spent on anyone/everyone in the state. Teachers never missed one penny dedicated to their retirement/AAI benefit.
Comment by AnonymousOne Thursday, Jul 2, 15 @ 10:48 am
=Back in the day when Chicago was allowed to take over CPS’ pension fund, the State school aid formula was changed to help Chicago out on the pension payments.=
True but if the state picked up the pension costs for Chicago as they do for every other district in the state, and took away the extra block grant funding you mentioned, Chicago would come out hundreds of millions of dollars ahead.
Rahm has already said he’d take that deal in a heartbeat.
Comment by Chicago parent Thursday, Jul 2, 15 @ 11:03 am
Well said Chicago Parent. Chicago contributes 3x’s the income tax revenue of all other counties in the State combined!! It is about time to have the State pay their fair share toward Chicago Teacher pensions just as they do for every other district in the state!!
Comment by chiagr Thursday, Jul 2, 15 @ 11:15 am
The Senate Republicans (deep breath) did an analysis of CPS vs state funding and found Chicago, even with the pension discrepancies, took far more than their fair share of education funds in the state. To me, this focus on pension funding alone skews the overall story.
http://www.senategop.state.il.us/Portals/0/Docs/Cost-Shift-FINAL.pdf?timestamp=1409174250732
Comment by nixit71 Thursday, Jul 2, 15 @ 11:25 am
==Teachers ARE NOT state employees.==
However, the Illinois Constitution states that the “The State has the primary responsibility for financing the system of public education.” Aren’t then, teachers and their salaries and retirement benefits part of public education?
Comment by Joe M Thursday, Jul 2, 15 @ 11:31 am
Ok let’s transfer all normal pension costs to districts throughout the state. Phase it in over 4 years say 75% 1st yrddrop 25% per year which means covering cps for 75% too. Transferring the funds that would have gone into pensions into the k-12 ed budget. Make it contingent on making all state aid distributed by a formula that doesn’t rely on the childs zipcode. Problem solved
State owes the money they shorted cps owes what they shorted.
Comment by Mason born Thursday, Jul 2, 15 @ 12:33 pm
There was a response to the Senate Republican analysis of CPS vs state funding showing the numbers in the Republican report were not accurately showing the picture.
http://www.housedem.state.il.us/SchoolFunding042213.pdf
Comment by Anonymous Thursday, Jul 2, 15 @ 12:34 pm
CTPF is on a longer funding schedule (they have to reach 90% funded by 2059) than TRS (90% funded by 2045). If the CTPF schedule was shortened it would likely cause it to be in “worse shape” than TRS.
Comment by Anonymous Thursday, Jul 2, 15 @ 12:38 pm
Anon 12:38: changing the CTPF (widely ignored) funding plan to match TRS would only affect future contributions and not the Fund’s current financial status. To the extent contributions were accelerated 15 years, the Fund would see improved funded status more quickly.
Comment by Arthur Andersen Thursday, Jul 2, 15 @ 12:52 pm