2 Investigators: How The CPS Pensions Turned Into A Budget Mess

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(CBS) — As the school system faces a major budget crisis, some Chicago teachers are getting six-figure pensions.

CBS 2 Investigator Pam Zekman traced the origin of those pensions back to mistakes in negotiations decades ago in this Original Report.

To avoid a dreaded teachers strike like the one threatened last week by Chicago teachers, Mayor Jane Byrne brokered a deal to avert a crisis in 1981

CPS agreed to pay seven percentage points of the teachers’ nine percent pension contribution despite warnings from the finance authority.

“It’s going to give them an absolutely intolerable problem in the future,” said Finance Authority Chairman Jerome Van Gorkham in 1981.

He was right. Now the pension pickup costs CPS 170 million tax dollars a year.

“In the last decade alone it’s cost taxpayers $1.5 billion,” said Ted Dabrowski of the Illinois Policy Institute. “It’s no longer sustainable, not for the taxpayers nor for the school district.”

Last week the union rejected an offer to phase out that pension perk by 2018. Then CPS threatened to take it all away this year.

“We consider eliminating it unilaterally to be breaking the law,” said Chicago Teachers Union vice president Jesse Sharkey.

Another expensive hit for taxpayers is the 3 percent cost of living increases teachers get year-after-year once they retire, a benefit retained by 23,000 current teachers.

As for the 24,000 teachers already receiving pensions we found more than 800 get getting more than $100,000 a year, 51 percent of them get an average pension of at least $54,000.

“They are not excessive,” said Charles Burbridge of the Chicago Teachers Pension Fund. “We are trying to provide retirement security, not to throw the retirees to the wolves.”

The retiree with the highest pension is Manford Byrd, at $181,000 in part because he rose from teacher to superintendent.

In second place Barbara Eason-Watkins who rose to Chief Education Officer. She supplements her $168,000 pension with a $145,000 salary as superintendent of Michigan City, Indiana schools.

“It’s time that going forward we move to a 401k style plan that is affordable for the school budget and for taxpayers and that really protects the retirements of teachers,” Dabrowski said.

Because of its poor financial condition it’s unclear whether CPS will even make its required contribution to the teachers pensions, $688 million this year.

If new salary increases are part of the contract deal that finally gets negotiated, experts say it could still cost taxpayers more in the long run.

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