Trustee Vacancy Declared: Applications Due July 6
In accordance with the Pension Board Bylaws, following Trustee Eshoo's resignation, the Board declared a vacancy in a Teacher Trustee position. The Vacancy Committee appointed by Board President Jay Rehak includes Trustees Lois W. Ashford (chair), Jeffery Blackwell, and Mary Sharon Reilly. The committee will evaluate candidates and make a recommendation to the Board at the next regular meeting on July 19, 2018. The individual appointed to fill the position will serve until this fall's annual election in November.
Any eligible active teacher may ask to be considered to fill the vacancy. A candidate for the Teacher Trustee position must meet the following eligibility criteria:
- Be a Member, other than a Principal/Administrator, as defined in 40 ILCS 5/17-106; and
- Have been assigned on a regular certificate for at least 10 years in the Chicago Public Schools or charter schools within District 299 (this includes anyone who is licensed and has worked in the Chicago Public Schools or Charter Schools for at least 10 years on a regular certificate, including as a substitute).
To apply for the vacant Teacher Trustee position, please submit a resume and a candidate statement to Charles A. Burbridge, Executive Director, firstname.lastname@example.org, no later than 5:00 p.m. CST on Friday, July 6, 2018. The Vacancy Committee will meet prior to the next regular Board of Trustees' meeting to review applications and evaluate the candidates.
CTPF Trustee Bernice Eshoo Announces Retirement
CTPF extends its congratulations and best wishes for a long, happy, and productive retirement to CTPF Trustee Bernice Eshoo, who announced her retirement from CPS after 34 years of service. A tireless advocate for students, Trustee Eshoo has been a dedicated volunteer for various student-focused organizations and has served on several other committees and boards in addition to her duties as a CTPF Trustee.
With her retirement, Trustee Eshoo has also resigned from the CTPF Board of Trustees. Trustee Eshoo was appointed to the CTPF Board of Trustees in July 2013 and reelected in 2016. She served in a variety of leadership positions, including Recording Secretary and co-Chair of the Personnel Committee. She is also a Chicago Teachers Union (CTU) elected trustee and executive board member, and has chaired the CTU scholarship committee while also serving on several other committees.
"On behalf of our Board of Trustees and the CTPF staff, I offer sincere thanks to Trustee Eshoo for her years of dedicated service to CTPF and its members, and wish her all the best in her retirement," said Charles A. Burbridge, CTPF Executive Director.
Chicago Teachers' Pension Fund Board Passes Unanimous Resolution Supporting Opioid Lawsuit
CTPF Trustees support action against companies which created and continue to perpetuate the nation's opioid crisis
CHICAGO – May 22, 2018 – During their meeting on Thursday, May 17, 2018, the Chicago Teachers' Pension Fund (CTPF) Board of Trustees (Board) unanimously passed a resolution supporting a lawsuit brought by local governments and Health & Welfare Funds against the pharmaceutical manufacturers, wholesalers, distributors, and pharmacy benefit managers who have helped to create and perpetuate the nation's opioid crisis. The action also demonstrates the Board's support and obligation to continue to protect CTPF's members in administering and contracting for the health insurance program that CTPF offers to its retirees.
The opioid crisis in the United States continues to escalate, with opioids killing more than 42,000 people in the United States in 2016, more than any year on record. On October 27, 2017, the U.S. Department of Health and Human Services recognized the gravity of the crisis and declared a nationwide Public Health Emergency.
Young adults are disproportionately impacted by addiction to prescription drugs, and in Illinois, educators, administrators, and school support personnel have been recognized as critical elements in the battle against addiction, and have been called upon to fight this epidemic in schools and communities.
"Educators, administrators, and school support personnel face the opioid epidemic every day, providing front-line intervention in schools and bearing witness to the devastation this epidemic has on children, families, and communities," said Jay C. Rehak, President of the CTPF Board of Trustees. "This action demonstrates our Board's recognition of the scope of this problem and offers our support for the local governments and Health and Welfare Funds working to secure greater accountability from the companies who contribute to and perpetuate this devastating crisis."
The resolution passed by the Board highlights the role that drug manufacturers and their marketing efforts played in the creation of the epidemic. Driven by an economic interest in expanding markets and increasing profits, manufacturers in the 1990s reassured the medical community that patients would not become addicted to opioid pain relievers and healthcare providers began to prescribe them at greater rates. The National Institute of Health recognized the aggressive marketing of these drugs as a major cause and reason for a drastic increase in the number of prescriptions written and dispensed, resulting in widespread misuse, before it became clear that these medications could indeed be highly addictive.
The multi-district litigation (National Prescription Opiate Litigation, No. 17-MD-3804) is taking place in the United States District Court for the Northern District of Ohio and consolidates lawsuits from across the country.
CTPF PROVIDES $1.9 BILLION POSITIVE IMPACT TO ILLINOIS ECONOMY
CTPF Releases 2018 Economic Impact Statement
CHICAGO – April 25, 2018 – The Chicago Teachers' Pension Fund (CTPF) today announced the release of its 2018 Economic Impact Statement. CTPF made $1.3 billion in direct payments to annuitants living in Illinois in 2018. Those payments had a $1.9 billion impact on the Illinois economy, supporting 14,704 jobs in the state. The Buck Stays Here: Understanding the Economic Impact of CTPF Benefit Payments on the State of Illinois and the City of Chicago is produced annually and details CTPF's impact on the State of Illinois and the City of Chicago. The 2018 edition breaks out economic impact by Chicago Ward for the first time.
"A majority of our members stay in Illinois after retirement, and the pensions they have earned are spent close to home, supporting local and regional economies. This spending across the state, and specifically in the City of Chicago, contributes to overall community vibrancy," said Charles A. Burbridge, CTPF Executive Director. "CTPF pensions provide a sustainable retirement for 24,440 Illinois residents who continue to give back to their communities in countless ways."
The report found that 83 percent of CTPF's annuitants who collect a pension stay in the State of Illinois, with nearly half of that number continuing to call Chicago home. The beneficiaries residing in Chicago are responsible for approximately $1.0 billion in total economic impact and support 7,500 jobs across the city.
The study used standard economic multipliers from the U.S. Department of Commerce Bureau of Economic Analysis to assess the economic impact of spending. View the full report on www.ctpf.org.
CHICAGO TEACHERS' PENSION FUND MAINTAINS POLICY TO DIVEST FROM ALL INVESTMENTS IN RETAIL ASSAULT WEAPONS MANUFACTURERS
CTPF Applauds AFT Call for Investor Action to Hold Gun Manufacturers Accountable for Risks to Society
CHICAGO – April 19, 2018 – The Chicago Teachers' Pension Fund (CTPF) applauds the American Federation of Teachers (AFT) for its report issuing a call to action asking investors to hold gun manufacturers accountable for risks to society. In January 2013, responding to the tragedy at Sandy Hook Elementary School, CTPF's Board of Trustees took action to divest from all investments in retail assault weapons manufacturers. CTPF Trustees continue to hold fund managers accountable for following this policy to protect teachers and students from mass violence. The AFT issued a report urging all pension fund trustees to meet with their asset managers, engage in meaningful dialogue, and take action by addressing risk exposure through divestment.
"This week marks the 19th anniversary of the Columbine shootings. Since that tragic day, more than 187,000 students have been directly impacted by school shootings (1), and every school aged child has been indirectly scarred by those tragic events. Our teachers are on the front line in schools and deeply understand that the third leading cause of death for the kids in our classrooms (2) is gun related," said Jay C. Rehak, President of the CTPF Board of Trustees. "We have a responsibility to protect our teachers and students as well as to act as fiduciaries. A pension fund weighs and balances investment risk, and the bottom line is that investing in weapons manufacturers involves intolerable reputational, regulatory, and statutory risks."
The AFT "Gun Manufacturing and Investment Risks" report helps confront the gun violence epidemic in the United States. The report creates a watch list of investment managers that invest millions of dollars in companies that make assault weapons. It details work done to engage major fund managers in this dialogue and offers strategies for pension fund trustees to pursue when making investment decisions to help mitigate the safety risks assault weapons pose.
1. John Woodrow Cox and Steven Rich, “Scarred by School Shootings,” Washington Post, updated March 25, 2018, https://www.washingtonpost.com/graphics/2018/local/us-school-shootings-history/?utm_term=.669ac9accfd3
2. http://pediatrics.aappublications.org/content/early/2017/06/15/peds.2016-3486 #F1 Pediatrics, June 2017, Childhood Firearm Injuries in the United States, Katherine A. Fowler, Linda L. Dahlberg, Tadesse Haileyesus, Carmen Gutierrez, Sarah Bacon
With the recent release of the Chicago Tribune editorial and story, CTPF has been receiving messages from members concerned about their pensions. CTPF has a stable funding plan which will bring our funded ratio up from the current 50.1% to 90.0% by 2059. Pensions for CTPF members are guaranteed, and CTPF has never missed a pension payment.
The Tribune highlights recent changes in the actuarial assumptions used to calculate payments owed to CTPF -- changes which lower the investment rate assumptions from 7.75% to 7.25%. These changes, recommended by the State of Illinois actuary, mean that the Fund's Trustees are taking a more conservative approach to ensure that the Employer makes adequate payments. CTPF Trustees have a stable, conservative, and responsible investment plan in place to ensure the strongest stewardship of public funds. Additionally, our track record is excellent - as a long-term investor, CTPF has returned 8.7% over the past 35 years, exceeding our expected return of 7.25%.
The shortfall in CTPF funding stems from long-term policies which failed to provide adequate revenue for our Fund. Illinois law specifies that funding for pensions shall be a combination of employer contributions, state appropriations, employee contributions, and earnings on investments. A funding crisis at the Chicago Public Schools in the mid-1990s changed the structure of pension funding and eliminated the tax levy and employer contributions for nearly a decade. This pension "holiday" from 1996-2005 cost CTPF more than $2 billion in funding. Additional legislation passed in 2010 granted the Employer an additional $1.2 billion in relief. During this same period, the State did not uphold its commitment to CTPF.
Lacking revenue and the opportunity to invest that revenue, CTPF's funded ratio fell from 100.8% in 1999 to 49.5% in 2013. Decades of protest by CTPF members and a funded ratio below 50% demonstrated the critical need for change. Legislation passed in 2016 and 2017 reestablished the tax levy, established the State's obligation to fund the normal cost of Chicago's teacher pensions, and provided funding to offset the cost of retiree health insurance. These changes help to correct mistakes of the past, and have set CTPF on a stable and sustainable path for the future.
CTPF is currently receiving the required funding to reach its target of being 90% funded by the year 2059.
Pensions provide secure and stable retirements for teachers, administrators, and public school personnel, and provide an economic engine for the City of Chicago and State of Illinois. Find additional financial information about the Fund in our Comprehensive Annual Financial Report.
For more information on CTPF's funding history, see A History Lesson from Chicago's Educators.
Lois Nelson Appointed to Fill Pensioner Trustee Vacancy
Thursday, March 15, 2018, the Chicago Teachers' Pension Fund Board of Trustees appointed Lois Nelson to serve as a Pensioner Trustee until the Board's November 2018 meeting. Trustee Nelson temporarily fills the vacancy created by Dr. Walter E. Pilditch's death on December 24, 2017. There will be an open election this fall to complete the remaining year of Dr. Pilditch's two-year Pensioner Trustee term.
Trustee Nelson earned a BS in Education from Chicago State University, and an MS in Education from Governor's State University. She was a teacher at Earle Elementary School for more than 40 years and retired in 2011. She served the CTPF Board as a Teacher Trustee from 2005-2010, including spending parts of her tenure as Financial Secretary and Vice President for the Board. Trustee Nelson has been an active member of several groups and organizations, including the Chicago Teachers Union Retiree Functional Group, Caucus of Rank-and-File Educators (CORE), and AFT Black Caucus Chicago Chapter.
"We appreciate Ms. Nelson's previous service to CTPF and welcome her back to the Board of Trustees representing our pensioners," said Charles A. Burbridge, CTPF Executive Director. "We value the experience and dedication that she brings to the Board and look forward to working with her in the months ahead."
Based on the Vacancies section of CTPF's bylaws, following the declaration of the vacancy on the Board, a Vacancy committee was appointed to evaluate candidates and to recommend an individual to the Board to fill the vacancy. Seven retired members applied for the position. The committee met to evaluate applications and to interview finalists and made a formal recommendation which the Board accepted on March 15, 2018. An election will be held to fill the vacancy in November 2018.
Board of Trustees Pensioner Trustee Vacancy
On December 24, 2017, Dr. Walter E. Pilditch, a Pensioner Trustee, passed away following a short illness. Trustee Pilditch will be missed by the Board of Trustees and Fund staff. We will always remember and appreciate his dedication to education and the retirement security of the Chicago teaching community.
With Trustee Pilditch's passing, in accordance with the Pension Board Bylaws, the Board has declared a vacancy in a Pensioner Trustee position. The President of the Board appointed a Vacancy Committee of three Trustees to evaluate candidates to fill the vacancy and to make a recommendation to the Board at its next regular Board meeting on February 15, 2018.
Any eligible retired teacher, principal, administrator, or other retiree may ask to be considered to fill the vacancy. A candidate for the Pensioner Trustee position must meet the following eligibility criteria:
- be a service, reciprocal, or disability pensioner receiving monthly payments from the Fund
Pursuant to the Board's policy on vacancies, the Vacancy Committee will consult with the Retired Teachers Association of Chicago regarding candidates, and will meet prior to the next regular Board of Trustees' meeting to review applications and to evaluate the candidates.
To apply for the Pensioner Trustee position, please submit a resume and a candidate statement to Charles A. Burbridge, CTPF Executive Director, at email@example.com, no later than 5:00 p.m. CST on Friday, February 2, 2018.
Chicago Teachers' Pension Fund Files Suit against Prologue, Inc., for Failure to Report Teachers and to Make Pension Contributions
Board of Trustees takes action to protect members after audit reveals damaging fiduciary violations
CHICAGO –December 5, 2017 – The Chicago Teachers' Pension Fund (CTPF) today filed a lawsuit in Cook County Circuit Court against Prologue, Inc., the operator of the now-closed Joshua Johnston Charter School for Fine Art and Design (Johnston). The suit alleges that between at least January 2013 and June 2016, Prologue failed to report the employment of licensed teachers and to pay pension contributions to CTPF as required by the Illinois Pension Code on behalf of those teachers. As shown in the audit, Prologue reported only 6 out of 16 Johnston licensees in Fiscal Year 2014 and, despite Johnston having 17 licensees in Fiscal Year 2015 and 14 licensees in Fiscal Year 2016, Prologue reported no teachers or other licensed employees to CTPF for either of those fiscal years. The suit also names the organization's Chief Executive Officer Nancy E. Jackson and Chief Financial Officer and Pension Officer Jack Robertson, asking the court to hold them personally accountable for their actions.
"This is an egregious example of an employer taking advantage of its employees," said Jay C. Rehak, President of the CTPF Board of Trustees. "This wasn't just sloppy bookkeeping. This was fraud. The employer collected contributions from teachers, but did not turn over all of those contributions to the Fund. They also concealed teachers who were entitled to pension benefits. These unconscionable actions allowed Prologue's leaders to take advantage of our members. Our Trustees put our members first and will do everything we can to protect them."
The action seeks to compel an accounting of Prologue's earlier pension reporting on behalf of Johnston to determine if there was additional non-reporting of licensed teachers and non-payment of pension contributions on their behalf. In addition to seeking an accounting and delinquent contributions, the accompanying statutory late fees, interest and attorneys' fees and costs, the lawsuit also alleges breach of fiduciary duty, fraud, unjust enrichment, trover and conversion, and violation of the Illinois Wage Payment and Collection Act in connection with the defendants' failure to accurately report and pay contributions on behalf of teachers.
CTPF filed the suit after an audit of Prologue's finances by a CTPF-engaged outside accounting firm, for the period January 1, 2013, through June 30, 2016, revealed widespread underreporting of pensionable wages and a failure to pay required contributions on behalf of licensed personnel at Johnston. The school received more than $9.3 million in public funds from the Board of Education between 2013 and 2016. The audit found more than $1.4 million in underreported wages and more than $130,000 in unpaid pension contributions during the audited period.
Chicago's licensed teachers do not participate in Social Security. Instead, the Illinois Pension Code requires a payment of 9% of salary to fund pensions. Prologue agreed to pay 6.2% of the required employee contribution (the same as the required contribution for employees participating in Social Security), and the employees were to pay the remaining 2.8% of the contribution. Prologue violated the Illinois Pension Code by failing to report the employment of licensed teachers, and failing to report and remit employee contributions deducted from salaries of teachers or to pay its 6.2% employer share.
The Board of Education rescinded its charter agreement with Prologue to operate Johnston in August 2016. The Chicago Board of Education filed a separate lawsuit against Prologue on March 3, 2017, (City of Chicago v. Prologue Inc., No. 2017-CH-03181 in the Circuit Court of Cook County) alleging breach of contract and demanding financial accountability after Prologue refused to provide adequate financial records and information following the termination of its contracts with CPS.
Chicago Teachers' Pension Fund Remains Leader Among Pension Funds in MWDBE Efforts
CHICAGO –November 8 – The Chicago Teachers' Pension Fund (CTPF) today announced that it invested $4.0 billion, more than one-third of total fund assets, with Minority, Women and Disabled-Owned Business Enterprise (MWDBE) firms. The Fund's work was highlighted during October testimony presented to legislators at an Illinois Senate Committee hearing on Pensions and Investments.
"Since the early 1990s, CTPF has been at the forefront of pension and retirement systems throughout the United States, ensuring that investment firms owned by minorities, women, and persons with disabilities have access to the many opportunities to conduct business with the Fund," said Jay C. Rehak, President of the Chicago Teachers' Pension Fund Board of Trustees. "This philosophy has become a part of our organizational culture, and we appreciate the opportunity to highlight our achievements in the diversity report."
The recently submitted report is required by a 2009 Illinois law, PA 96-006, encouraging the trustees of public pension funds to use emerging investment managers in managing their system's assets. The law also encourages funds to take affirmative steps to remove any barriers to the full participation of emerging investment managers in investment opportunities.
A breakdown of assets by status as of June 30, 2017, includes $1.99 billion managed by Woman-owned firms; $1.37 billion managed by African American-owned firms; $439.3 million managed by Latino-owned firms; $183.4 million managed by Asian American-owned firms; $27.9 million managed by Persons with a Disability-owned firms, and $17.5 million managed by Multiple Minority-owned firms.
CTPF has seen dramatic growth in MWDBE investments since 1993 when it initiated its program. The Fund invested less than 6% of assets in MWDBE-owned funds in 1993, and today the total investment has grown to 38.4%. Since 2007, the Fund has exceeded the goal of investing 20% of Fund assets with MWDBE firms.
"We look forward to continuing our productive partnership with the more than 52 MWDBE-owned firms who manage 59 portfolios for the Fund," said President Rehak.
CTPF invests in emerging managers through direct mandates and Manager-of-Managers programs (MoMs). Currently the Fund has direct relationships with 26 MWDBE firms who manage 53 portfolios. The Fund has MoMs relationships with an additional 15 MWDBE firms who manage 19 investment portfolios. Managers who perform well under the MoMs program may graduate to direct mandates with the Fund. Since the program's inception, eight firms have graduated to direct mandates.
A copy of CTPF's 2017 Diversity report is available at www.ctpf.org.
CTPF Trustees Adopt Resolution Affirming Commitment to U.S. Infrastructure Investment
The Chicago Teachers' Pension Fund (CTPF) Board of Trustees unanimously voted to adopt a resolution affirming its commitment to U.S. infrastructure investment during its meeting on September 21, 2017.
Citing the critical role that infrastructure plays in delivering economic growth, reducing poverty, and addressing development challenges, the resolution recognized that U.S. infrastructure investments safeguard the health and safety of our collective society and are in the best interest of the Fund and its members.
"Our Trustees took an important step in publicly affirming our support for U.S. infrastructure investments. Our Board of Trustees has made U.S. infrastructure investments a priority since 2009, and we have committed more than $360 million to this asset class since that time. As responsible stewards of public funds, we appreciate the opportunities that infrastructure investments present not just to meet our investment goals, but also to promote the public good. These investments pay dividends not just as an investment return, but in a much broader sense, providing jobs in the skilled trades, supporting families, and helping grow the economy," said Jay C. Rehak, President of the CTPF Board of Trustees.
The Trustees considered evidence offered by the American Society of Civil Engineers in their "2017 Report Card for U.S. infrastructure," which evaluated U.S. aviation, bridges, dams, drinking water, energy, solid waste, transit, and wastewater and gave these facilities a D+ overall rating. Furthermore, the Trustees noted that recent natural disasters have underscored the need to rebuild, maintain, and improve aging U.S. infrastructure systems to address long-term issues of urbanization and climate change.
"We know that many funds have begun to consider infrastructure as a way to diversify portfolios in a low-interest rate environment," said Charles A. Burbridge, CTPF Executive Director. "This resolution underscores our Trustees' leadership in this area, and highlights their commitment to making impactful and responsible investments of public funds."
The formal resolution can be found here.
School Funding Legislation Provides State Pension Contribution to CTPF
On Thursday, August 31, 2017, Governor Rauner signed Senate Bill 1947 into law. The bill was passed earlier this week by both the Illinois House and Illinois Senate. This legislation makes changes to Illinois' school funding formula, and requires the State to pay the long-sought normal cost of Chicago teachers' pensions.
The legislation has three main components which impact CTPF:
- Beginning with the 2017 tax year, the City of Chicago's Board of Education may impose a dedicated property tax levy of up to 0.567% (the current property tax levy rate is capped at 0.383%). This increase, if implemented, will generate additional revenue which will go directly to the Fund.
- Starting this fiscal year (July 1, 2017-June 30, 2018), the State will pay CTPF the normal cost of Chicago teachers' pensions and retiree health insurance costs. Beginning in Fiscal Year 2019, CTPF will provide a certified normal cost to the State on an annual basis which will include the $65 million authorized for the retiree health insurance subsidy.
- The legislation also provides a continuing appropriation for all amounts contributed by the State to CTPF.
"This legislation offers stable and equitable State funding for CTPF and provides Chicago's Board of Education with additional resources. We appreciate the hard work and cooperation that made this possible," said Charles A. Burbridge, CTPF Executive Director. "The State has paid the normal cost of downstate/suburban teacher pensions, and this legislation ensures that teachers are treated equitably throughout the State. We want to thank our members who have spent more than a decade educating legislators about the importance of fully funding pensions and, as a result, education in Illinois."
CTPF ANTITRUST LAWSUIT CLEARS MAJOR HURDLE
The Chicago Teachers' Pension Fund's ongoing antitrust litigation involving the world's largest banks cleared a major hurdle on July 28, 2017, when Judge Paul Engelmayer of the U.S. District Court for the Southern District of New York ruled that the suit could proceed. The Fund's lawsuit, filed in November 2015, alleges that the world's largest investment banks conspired to engineer and maintain a collusive and anti-competitive stranglehold over the market for interest rate swaps (IRS), in violation of federal antitrust laws. Such alleged actions harm investors in one of the world's largest financial markets. CTPF is represented by Cohen Milstein Sellers & Toll and Quinn Emanuel Urquhart & Sullivan, LLP.
"We are pleased to see that the court has recognized the legitimacy and importance of this action," said Jay C. Rehak, President of the CTPF Board of Trustees. "We have taken this stand against the world's largest investment banks because a conspiracy of this scale cannot go unchecked. As consumers of financial products, we must trust that the institutions at the heart of our financial system act responsibly and transparently. We look forward to holding the banks accountable for their egregious behavior."
The "Dealer Defendant" banks named in the complaint include Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, the Royal Bank of Scotland, and UBS.
Interest rate swaps, regularly used by a broad spectrum of investors, allow an entity to trade its fixed interest rate payments for the floating interest rate payments of a benchmark or vice versa. When used appropriately, swaps provide investors with flexibility in managing debt and mitigating risk. This vehicle is used extensively in the financial marketplace, with more than $1.4 trillion in swaps changing hands daily.
According to the complaint, interest rate swaps have been standardized and ripe for exchange trading for years. Open exchange trading brings transparent and competitive pricing and faster execution to a market, resulting in significant financial and administrative benefits to investors. Exchange trading dominates the financial marketplace, and products ranging from equities to foreign currencies trade on electronic exchanges. The complaint alleges that the banks used their power to stop competitors from bringing exchange trading to the IRS market - artificially inflating the time for and costs of the trade process. As a result, CTPF paid more for swaps than it would have in a competitive market.
The suit seeks an injunction to put an end to this anti-competitive arrangement, and damages for the injuries suffered.
CTPF will continue to update members on the status of this litigation as it progresses.
Timeline of Lawsuit Events
The Chicago Teachers' Pension Fund files a lawsuit in federal court alleging that some of the world's largest investment banks conspired to engineer and maintain a collusive and anti-competitive stranglehold over the market for interest rate swaps (IRS) in violation of federal antitrust laws.
The Fund's attorneys, Cohen Milstein and Quinn Emanuel, appointed co-lead counsel in the lawsuit.
The suit clears a major hurdle when U.S. District Judge Paul Engelmayer allows the complaint against the world's largest banks to proceed.
Cohen Milstein website
August 1, 2017 Update on Senate Bill 1
This morning Governor Rauner used his amendatory veto on Senate Bill 1.
"We want our members to understand that first and foremost this action does not impact current pensions," said Charles A. Burbridge, CTPF Executive Director. "Our members will continue to receive the payments they earned and depend on for retirement security. The Fund supported Senate Bill 1 in its entirety because it corrected historical inequities in school funding. Thousands of our members made phone calls and sent emails to the Governor supporting this legislation, and we want to thank them for their efforts."
CTPF is reviewing the language of the amendatory veto and studying the implications of the Governor's action. The Fund will provide additional information as it becomes available.
Making an Impact: CTPF Pension Dollars Support the Illinois Economy
The Chicago Teachers' Pension Fund (CTPF) released its 2017 Economic Impact Study which details the important impact pensions have on the economy of the State of Illinois and the City of Chicago. CTPF made $1.2 billion in direct payments to annuitants living in Illinois in 2017. Those payments had a $1.8 billion impact on the Illinois economy, supporting 13,723 jobs in the state.
The Buck Stays Here: Understanding the Economic Impact of CTPF Benefit Payments on the State of Illinois and the City of Chicago is produced annually and details the Fund's impact on the State of Illinois, the City of Chicago, and each Illinois legislative district.
This year's document also includes information about the collective impact of Illinois' eight largest public pension funds, detailing the $11.6 billion in direct payments which contribute to $16.9 billion in economic activity, supporting 126,212 jobs in the state.
"A majority of our members stay in Illinois after retirement, spending their pensions in every legislative district. Our members eat at local diners, shop at local retailers, and ultimately put their hard-earned pension dollars back into the state's economy, driving economic activity and supporting thousands of jobs," said Charles A. Burbridge, CTPF Executive Director. "CTPF is just one of more than 600 public pension funds in Illinois, and more than nine percent of our adult population belongs to a public fund. When we look at the collective impact of these groups, it's clear that pension dollars provide a major economic engine in Illinois."
The report found that 83 percent of the CTPF's annuitants stay in the State of Illinois, with nearly half of that number continuing to call Chicago home. The annuitants residing in Chicago are responsible for approximately $940 million in total economic impact and support 7,025 jobs across the city.
The study used standard economic multipliers from the U.S. Department of Commerce Bureau of Economic Analysis to assess the economic impact of spending. Click here to view the full report.
Gregory Redfeairn Selected to Fill Teacher Trustee Vacancy
Thursday, July 20, 2017, Chicago Teachers' Pension Fund Board of Trustees voted for Gregory Redfeairn to serve as a Teacher Trustee. Redfeairn will serve out the remainder of Raymond Wohl's term, until the Board's regular November meeting. Trustee Wohl retired from active service in June.
Trustee Redfeairn has taught high school in the Chicago Public Schools since 1993, and currently teaches math and art at Foreman College and Career Academy. Raised in Chicago, Redfeairn attended CPS schools from Head Start through high school. He earned both a B.S. in Art and an M.F.A. in Art from the University of Wisconsin, Madison. Redfeairn has been a strong pension advocate, serving as a CTPF Pension Representative, and as a member of the CTU Pension-Insurance Committee. An active community member, he has served in leadership roles at his church and as vice-president of his local neighbors association.
"We are pleased to have an active and engaged community member join our board to represent Teacher Trustees," said Charles A. Burbridge, CTPF Executive Director. "Our Trustees put a tremendous amount of time and energy into the business of the Fund and we look forward to Trustee Redfeairn's contributions and insights."
According to Fund policy, following the declaration of the vacancy on the Board, a committee was appointed to evaluate candidates and recommend an individual to the Board. Four active teachers applied for the position. The committee met to evaluate applications and made a formal recommendation which the Board accepted on July 20, 2017. The next election for Teacher Trustees will be held November 1-7, 2017.
June 30, 2017: CPS Makes Partial 2017 Pension Payment
The Chicago Board of Education (CPS) is required to make a payment to the Chicago Teachers' Pension Fund (CTPF) of $733 million for the 2017 fiscal year, ending June 30, 2017. Prior to today, the balance due to CTPF was $714 million.
Today, CTPF received $464 million from CPS, bringing CPS's total pension contribution to $483 million for fiscal year 2017, leaving $250 million outstanding. CTPF expects to receive the balance of the payment from CPS through an estimated $250 million tax levy by the end of August. The State restored CPS's power to levy a pension tax in 2016. Proceeds from the tax levy will be remitted directly to the Fund.
CTPF is currently working to ensure that the Fund is made whole by receiving interest on the delayed payment.
"While we appreciate this partial payment, it is our fiduciary responsibility to safeguard our members' pensions, protect the Fund, and make it whole. Our Board has made it clear to CPS that we cannot accept anything less than full payment and compensation for any delays, and our Trustees are fully committed to taking whatever action is necessary to reach this outcome," said Jay C. Rehak, President of the CTPF Board of Trustees.
Contact your State legislators today: OPPOSE SB 1570
CALL TO ACTION
Please let your elected representatives know that you OPPOSE SB 1570. Click here for our Legislative Action Center where you can send an e-mail directly to your elected representatives in the Illinois Senate and House.
About SB 1570
CTPF has a fiduciary responsibility to manage and administer the Fund in compliance with all applicable laws. According to Illinois Pension Code, CPS charter schools must submit payroll data and contributions within 30 days of the close of a payroll period, or they face penalties for failing to comply with the law.
Senate Bill 1570 would change the reporting requirements for charter schools and force CTPF to forgive penalties imposed on schools which did not follow the law.
Please contact your State Senator and Representative TODAY and tell them that you OPPOSE SB 1570. This proposal jeopardizes teachers' pensions, allowing charter schools to disregard their financial obligations by passing their expenses back to the Chicago Public School system. The measure also limits CTPF's ability to collect assets and adds to the Fund's expenses by creating an unreasonable administrative burden.
Charter School employers can avoid fees and penalties by submitting accurate payroll data within 30 days of the close of payroll. CTPF works collaboratively with charter schools to ensure compliance. The Fund currently sends reminder notices and may waive fees when the late payment occurs with good cause or extenuating circumstances. The additional requirements imposed by SB 1570 would make collecting unpaid debts from delinquent charter schools even more difficult.
Click here for a fact sheet about SB 1570.
CTPF Executive Director Testifies in Support of HB 2948
Springfield, Ill., April 4, 2017, CTPF Executive Director Charles A. Burbridge with Representative William Davis (D- East Hazel Crest), Chairman of the Appropriations-Elementary & Secondary Education Committee, and Sponsor of HB 2948.
April 4, 2017, CTPF Executive Director Charles A. Burbridge traveled to Springfield to testify before the House Appropriations-Elementary & Secondary Education Committee during a subject matter hearing which included House Bill 2948. The bill, sponsored by Representative William Davis (D- East Hazel Crest), Committee Chair, addresses the issue of State of Illinois pension parity for CTPF.
CTPF supports the measure which requires the State of Illinois to make a $465 million contribution to CTPF in fiscal year 2018, and then make annual contributions equal to 10% of the State revenue provided to the downstate teachers' retirement system.
"House Bill 2938 addresses a long-standing inequity in funding and restores State revenue long-promised to CTPF," said Burbridge. "CTPF represents about 17% of the active and retired teachers in our state, but we receive less than 1% of the pension funding dollars allocated by the State. It's time to address this issue, and we appreciate the time and attention this committee took to understand this inequity."
Burbridge answered legislators' questions and shared additional information about the legislation. The Committee did not take any action. CTPF will continue to update members on the status of this bill and will provide additional information as it becomes available.
- Illinois statutes specify that revenue for the Chicago Teachers' Pension Fund comes from four sources: employer contributions, employee contributions, state appropriations, and investment earnings.
- A financial crisis hit CPS in the early 1990s, and Illinois legislators allowed a change in the structure of pension funding. Lawmakers allowed CPS to keep revenue from a tax levy earmarked for pension funding.
- When legislators took this step, they also affirmed the State's intent to continue to provide equitable funding for CTPF in the amount of 20-30 percent of the amount provided to the downstate/suburban system.
- Instead of remaining a steady source of revenue, State funding has eroded over the years. CTPF now receives less than a penny for every dollar sent to fund downstate teacher pensions.
CTPF Executive Director Testifies in Springfield
January 24, 2017, CTPF Executive Director Charles A. Burbridge offered testimony before the Illinois Senate Executive Committee in Springfield, Ill. The committee held subject matter hearings on several bills including Senate Bill 5 and Senate Bill 11, both sponsored by Senate President John J. Cullerton.
CTPF supports Senate Bill 5 which would provide additional revenue for the Fund, and Burbridge answered a series of questions about the proposal. "I appreciated this opportunity to testify on behalf of our members and to help the fact-finding process," said Burbridge. "CTPF serves as an 'honest broker' in these discussions, and the information I shared helps our elected representatives understand the needs of our Fund and the impact that legislation will have on our long-term financial stability."
- CTPF supports SB 5 which requires the State to contribute $215 million for fiscal year 2017, $221.3 million in fiscal year 2018, and pay the Fund's "normal cost" beginning with fiscal year 2019. This bill helps bring financial parity with other state pension systems and ensures a stable revenue source for CTPF.
- CTPF has not taken a position on Senate Bill 11, a reform measure which offers "consideration" to active Tier 1* members who elect a future pension with an automatic annual increase based on the Tier 2 model.
- The Executive Committee did not take any action on either bill.
CTPF will continue to update members on the status of these bills, and will provide additional information as it becomes available.
*Tier 1 includes members who joined CTPF or a qualified reciprocal system before 1/1/2011.
CTPF Executive Director Responds to Pension Funding Bill Veto
"Education funding reform is a must for our state and pension parity is one important avenue for achieving this goal."
December 2, 2016 - On Thursday, December 1, Gov. Bruce Rauner vetoed a bill that would appropriate $215.2M to the Chicago Teachers' Pension Fund for FY 2017. The Illinois Senate immediately moved to override the veto by a vote of 36-16. The House has up to 15 days to pass the funding bill that will support Chicago's students and teachers.
As Executive Director of your pension fund, I can assure you that yesterday's decision will not impact anyone who is receiving a pension. I can also assure you that the Fund will continue to advocate for legislative changes that bring state funding of pensions into parity. By not receiving equal funding support for Chicago teachers' pensions, the State is taking valuable education resources away from Chicago's students. As educators, retired and active, we know the impact that this decision will have on our children.
We believe tethering required education resources to unspecified changes that have historically been difficult to find agreement on can only result in hurting students. Education funding reform is a must for our state and pension parity is one important avenue for achieving this goal.
As disappointed as we are by the veto, we are encouraged by the number of legislators who are giving voice to this critical issue. We will continue to work closely with Springfield to help ensure these and other important issues receive the attention they require for real change to happen.
Finally, we thank you for the support you've shown for the Fund as we work to secure your retirement benefits.
Charles A. Burbridge
Teacher and Administrator Elections Update
October 7, 2016 – Each year during the first week in November, CTPF schedules elections for trustees to the Board of Directors. Candidate petitions for two seats at Teacher Trustees and one Administrator Trustee were due by end of business on Friday, September 30, 2016. Three teachers submitted petitions for the Teacher Trustee positions. There were no submissions for the Administrator Trustee position. The petitions for each of the three Teacher Trustee nominees were sent to a third-party election services provider for certification.
According to Illinois Pension Code 40 ILCS 5/17-139 (1), "the name of a candidate shall not be placed on the ballot unless he or she has been assigned on a regular certificate for at least 10 years in the Chicago public schools or charter schools and nominated by a petition signed by not less than 200 contributors who are not administrators."
Two candidates produced the required number of signatures after verification and were certified as candidates. Since the number of candidates did not exceed the open Teacher positions, the certified candidates were declared elected. Since no Administrator Trustee petitions were filed, the current Trustee representative retains the position until a time when he chooses to resign the post or the next election period. The Teacher and Administrator elections scheduled for November 2-3, 2016 have been cancelled.
Teacher and Trustees Elected
Jeffery Blackwell and Bernie Eshoo were re-elected Teacher Trustees. Jerry Travlos will remain Administrator Trustee. Blackwell, Eshoo, and Travlos will be re-installed at the November 10, 2016, CTPF Board of Trustees meeting, and will serve three-year terms from November 2016 – November 2019.
CTPF Releases Pension Economic Impact Studies
October 6, 2016 – Nearly $17 billion in new economic activity in Illinois was generated last year by pension benefits paid annually to retired Illinois teachers and government workers according to a new report produced by a collective of reciprocal Illinois pension funds.
Details of the positive effect public pensions have on the Illinois economy are outlined in a new report released by the leaders of eight Illinois public retirement systems that together have a membership exceeding 876,000 state taxpayers – or nearly 9 percent of Illinois' adult population.
In fact, public employees represent 10 percent (or more) of the local population in 14 Illinois House districts. Six (6) Illinois Senate districts also have percentages in the double digits. This percentage doesn't take into account family members who depend on the pension member for financial security.
"Chicago Teachers' Pension Fund has been producing a report like this for a number of years using CTPF data alone," said Jay C. Rehak, CTPF President of the Board of Trustees. "We know from our report that Chicago teachers' pensions make an impact everywhere in the state. It was time to look at the larger picture. This is one way to help people understand the bigger influence pension benefits have on the Illinois economy."
On the CTPF website there are three reports that combine to tell the economic impact of pensions on Chicago, Illinois and the nation. To learn more, go to:
- Pensions' Positive Impact on Illinois Economy - Full Press Release
- Illinois Public Pensions – Making a Difference Economic Impact Report 2016
- Illinois Public Pensions Economic Impact – Infographic
- Pensionomics 2016 from the National Institute on Retirement Security
- Pensionomics 2016 – Infographic
CTPF Again Leader in Diversity Investments
August 2016 – Investments with women- and minority-owned money managers by pension funds in Illinois have grown, but none more so than the Chicago Teachers' Pension Fund.
CTPF has been the leader in the field outpacing other pension funds in Chicago and across the state. At a special hearing held on August 11 -12, 2016 in Chicago, the Illinois Special Committee on Pension Investments' co-chaired Sen. Kwame Raoul stated that CTPF has "embraced [diversity] at every level."
As of May 31, 2016, the Chicago Teachers' Pension Fund has invested $3.3 billion or 35 percent of total Fund assets with minority, women, and disadvantaged business enterprise firms (MWDBE), well above the Fund's set policy goal of 20 percent.
"We are pleased that for the seventh consecutive year CTPF has received the praise of the committee for our continued commitment to diversity in selecting our business partners and our staff," said Chuck Burbridge, executive director of the pension fund. "More importantly, we recognize the importance of being in the forefront and ensuring that minorities, women, and persons with disabilities have many opportunities to work for and conduct business with CTPF."
Law Firms Representing CTPF Appointed Co-Lead Counsel in Antitrust Litigation
August 2016 - Last November, The Chicago Teachers' Pension Fund filed a lawsuit charging a number of the world's largest investment banks with conspiring to engineer and maintain a collusive and anti-competitive stranglehold over the market for interest rate swaps (IRS) in violation of federal antitrust laws – an action that harms investors in one of the world's biggest financial markets.
On August 3, 2016, in a Court ruling, the law firms of Cohen Milstein Sellers & Toll PLLC and Quinn Emanuel Urquhart & Sullivan, LLP, both representing the Chicago Public School Teachers' Pension and Retirement Fund, were appointed co-lead counsel in the lawsuit. The investors, led by the Chicago Teachers' Pension Fund, seek an injunction to put an end to this anti-competitive arrangement, and damages to compensate them for the injuries they have suffered.
"This is an important case against the biggest investment banks in the country. In addition to pension funds like the Chicago Teachers' Pension Fund (CTPF), the banks' conduct impacted municipalities, along with hedge funds, university endowment funds and other institutional investors. It is important that trading in interest swaps be transparent and done through exchanges in order to protect end-users like CTPF, and that investors be able to recover damages. Those are the goals of this lawsuit," said Cohen Milstein partner Carol Gilden. "We are very pleased with the Court's ruling appointing Cohen Milstein and our co-counsel, Quinn Emanuel, as co-lead counsel."
According to the complaint filed in November in the U.S. District Court, Southern District of New York, interest rate swaps have been standardized and ripe for exchange trading for years. Exchange trading brings transparent and competitive pricing and faster execution to a market, thus bringing significant benefits to investors. For instance, when foreign exchange trading recently started to move to electronic trading platforms, the bid/offer spread for certain currency transactions declined by over 50 percent.
Jay Rehak, President of the Board of Trustees of the Chicago Teachers' Pension Fund, added, "The conspiracy here shocked us – both with its scope, the prominence of the conspirators, and its impact on an important market. We realize that many investors would be hesitant to challenge the behavior of a group of the world's biggest banks, but we decided that if we did not step up, maybe nobody would. A level playing field will serve everyone."
The "Dealer Defendant" banks include Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, the Royal Bank of Scotland, and UBS.
The Cohen Milstein team is led by Carol Gilden, J. Douglas Richards and Michael Eisenkraft, of Cohen Milstein's Chicago and New York offices. The Quinn Emanuel team is led by Daniel L. Brockett. For more information about Public School Teachers' Pension and Retirement Fund of Chicago v. Bank of America Corporation, et al, please visit http://www.cohenmilstein.com/case-study/interest-rate-swaps-litigation.
CPS Makes Contribution Payment to the Fund
June 2016 - On June 30, 2016, CTPF received $657 million from the Chicago Public Schools as their portion of the pension contribution. This marks the third straight year CPS has made a significant payment to secure your retirement benefits. We have witnessed over $1.9 billion contributed to the fund in three years – a substantial step in safeguarding the future of our members. Let us all work to focus attention on ensuring equitable funding for education for all students.