Mayor Johnson caught in the middle of CPS-City Hall pension disagreement

Chicago Public Schools officials this week plan to release the budget for the upcoming academic year, after delaying it a month as they worked 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 has been over a pension payment that the city had paid for decades, but that former Mayor Lori Lightfoot, in a controversial and sharply criticized move, shifted to the school district in 2019, WBEZ has learned from multiple sources.

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

At the time Lightfoot forced CPS to take on the payment, she was blasted by the Chicago Teachers Union, where current Mayor Brandon Johnson was working as an organizer. They said she was “ripping off CPS,” and “robbing students.” They made the argument that the payment to the Municipal Employees' Annuity and Benefit Fund, which covers pensions for school clerks, teaching assistants and other paraprofessionals, was unequivocally the responsibility of the city.

Now that Johnson is mayor, and with the school district facing a sizable budget shortfall, some CPS board members want the city to pay for all or most of the pension contribution. The CPS fiscal year ended on June 30.

But Johnson’s administration is making the same arguments as Lightfoot. For one, more than 60% of the employees who are part of the Municipal Employees' Annuity and Benefit Fund work for CPS.

They also tie the decision to make CPS pay to CPS’ transition from an appointed school board to an elected one. In a statement, Johnson’s administration says this is part of the “path to separating City and CPS finances.”

And they note that the city will continue to “subsidize” CPS’ MEABF contribution. The city said CPS should actually be on the hook for $250 million this year, and that is set to go up to $289 million, but that Johnson has agreed to hold the line on CPS’ payment at $175 million for three years. Lightfoot also did not force CPS to pay its 60% portion of the MEABF.

The discussion over the pension payment is a sign of the delicate dance among the mayor, the school district, the CPS board and the Chicago Teachers Union. In theory, they are all now allies, given the major role the CTU played in electing the mayor and how he then appointed the school board and the CPS CEO. But they serve different constituencies. The CPS CEO and school board must balance the budget and try to provide the best possible education to students. The CTU also advocates for students, but ultimately needs to deliver a good contract to members.

CPS is projecting major deficits this year and growing in the years to come. It also just settled a contract with its support staff and is in the midst of contract negotiations with the CTU, which has significant financial implications. Last year, CPS used money from special taxing districts called TIFs to pay the MEABF contribution, but this year that money is needed for salary increases for support staff.

Meanwhile, the mayor has the whole city and all its problems, from safety to homelessness, to try to solve.

And who pays increasing pension costs is a big deal. The city pays $2 billion for pensions annually, about $1.1 billion of that into the municipal fund.

Teacher pensions in Chicago are paid through a levy, put in place by former Mayor Rahm Emanuel, and through general operating dollars. The state also picks up some of the CPS contribution to the teachers pension fund, but for all other school districts it pays the entire amount.

This infuriates everyone, from the mayor to Chicago Public Schools leaders, board members and the CTU. Last year the state essentially provided all other school districts nearly $3,000 more per student by fully paying their teacher pensions, but not CPS’, according to CPS budget documents.

Johnson takes this argument a step further. He says having CPS contribute to the municipal fund further bolsters “the argument that CPS must be treated the same as other school districts whose pension contributions are made by the State.”

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

Despite his friend occupying the fifth floor of City Hall, CTU Vice President Jackson Potter said he thinks CPS paying the MEABF pension payment is “an issue.” But he did credit Johnson with limiting the payment CPS has to make.

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