Mayor Johnson Caught in CPS-City Hall Disagreement Over Pensions

Chicago Public Schools officials plan to release their budget for the upcoming school year this week, after delaying it for a month as they struggled to close a more than $400 million deficit and tried to convince the former teacher who now occupies City Hall to help.

Much of the discussion centered on a pension payment that the city had paid for decades but that former Mayor Lori Lightfoot, in a controversial and widely criticized move, transferred to the school district in 2019, WBEZ learned from multiple sources.

The result of the negotiations: City officials say the school district will still have to pay a significant portion of that pension cost, $175 million. When Lightfoot shifted the cost five years ago, CPS’s payment was $60 million.

At the time Lightfoot forced CPS to take over the payment, she was roundly criticized by the Chicago Teachers Union, where current Mayor Brandon Johnson worked as an organizer. They said she was “ripping off CPS” and “stealing from students.” They argued that the payment to the City Employees Pension and Benefit Fund, which covers the pensions of school employees, teaching assistants and other paraprofessionals, was unequivocally the city’s responsibility.

Now that Johnson is mayor and the school district is facing a significant budget deficit, some CPS board members want the city to pay all or most of the pension contribution. CPS’s fiscal year ended June 30.

But the Johnson administration is making the same arguments as Lightfoot. For one thing, more than 60 percent of the employees who are part of the Municipal Employees Pension and Benefits Fund work for the CPS.

They also tie the decision to charge CPS to CPS’s transition from an appointed school board to an elected school board. In a statement, Johnson’s administration says it’s part of the “path toward separating city and CPS finances.”

And they note that the city will continue to “subsidize” CPS’s contribution to the MEABF. The city has said CPS should actually be responsible for $250 million this year, and that amount is set to increase to $289 million, but that Johnson has agreed to keep CPS’s payment at $175 million for three years. Lightfoot also has not forced CPS to pay its 60% share of the MEABF.

The pension debate is a sign of the delicate relationship between the mayor, the school district, the CPS board of trustees and the Chicago Teachers Union. In theory, they are all allies now, given the CTU’s major role in electing the mayor and then appointing the school board and CPS CEO. But they serve different constituencies. The CPS CEO and the school board must balance the budget and try to provide the best possible education for students. The CTU also represents students, but ultimately must deliver a good contract for its members.

The CPS is projecting large deficits this year and growing deficits in the years ahead. It has also just concluded a contract with its support staff and is in the process of amid contract negotiations with CTUwhich has significant financial implications. Last year, the CPS used money from special tax districts called TIFs to pay the MEABF contribution, but this year that money is needed for pay increases for support staff.

Meanwhile, the mayor must try to solve the entire city and all its problems, from security to homelessness.

And who pays the rising costs of pensions is a major issue. The city pays $2 billion a year in pensions, including about $1.1 billion in the municipal fund.

Chicago teachers’ pensions are paid through a tax, put in place by former Mayor Rahm Emanuel, and through general operating funds. The state also pays a portion of CPS’s contribution to the teacher pension fund, but for all other school districts, it pays the entire amount.

This situation has everyone from the mayor to Chicago Public Schools leaders to board members to the CTU infuriated. Last year, the state essentially gave every other school district nearly $3,000 more per student by fully paying their teachers’ pensions, but not CPS’s, according to CPS budget documents.

Johnson takes this argument a step further. He says the fact that CPS contributes to the city fund further strengthens “the argument that CPS should be treated the same as other school districts whose pension contributions are paid by the state.”

In response to questions about pension payments, the city said in a statement: “Mayor Johnson is committed to working with Chicago Public Schools, the Chicago Board of Education, community organizations and labor partners to fully fund our public education system and ensure that all Chicago children have the resources they need to thrive.”

Despite his friend occupying the fifth floor of City Hall, CTU Vice President Jackson Potter said he thought the CPS’s payment of MEABF’s pension was “a problem.” But he praised Johnson for limiting the payment the CPS has to make.

Sarah Karp covers education for WBEZ. Follow her on X @WBEZeducation And @sskedreporter.