Act Now: Support HB 5681: vote expected this week in the Illinois House
CTPF asks members to contact their Illinois legislators and ask them to support HB 5681. The legislation creates a 12-member Task Force to study retiree health insurance issues. The measure passed unanimously out of the House Personnel and Pensions Committee on April 14, 2016, and may be called for a vote in the Illinois House of Representatives this week.
Contact your legislators TODAY and ask them to vote “yes” on HB 5681. Click here to send an e-mail from CTPF's Legislative Action Center and find talking points for calling legislators.
Legislative Proposal has No Impact on Pension Fund
Recent headlines concerning a plan proposed by some legislators to allow Chicago Public Schools to declare bankruptcy and put school district under state supervision may have raised questions for CTPF members about the security of their pension fund.
It is important to note that Illinois has a constitutional provision that protects accrued and future retirement benefits. This essentially prohibits the legislature from making any changes that could decrease that liability or change your contracted employee retirement benefits. This protection of your pension funds has been supported by the courts.
CTPF continually monitors legislative action and works with our lobbyists on your behalf to ensure the protection of the fund and to secure full payment of what is owed under the law.
Announcing the passing of Mr. James F. Ward, former Trustee and Executive Director
February, 2016 - The Chicago Teachers' Pension Fund mourns the passing of Mr. James F. Ward, a leader who gave many years of service to the community.
Among his many contributions, Mr. Ward was Executive Director of the Chicago Teachers' Pension Fund from 1967-1997. Following his resignation, he subsequently ran for the position of Retiree Trustee and was elected in November 1997. He was re-elected to that position seven times, and served as a CTPF trustee for 16 years.
During his tenure he served as the chairperson of the Committee on Claims and Service Credits from 2002 until 2008, as recording secretary from 2011-2012, and as the chairperson of the Committee on Investments from 2011-2013. He retired from the Board of Trustees in November 2013 after serving the fund for 46 years.
"Jim understood pension and defined benefit plans better than anyone I have ever known," stated Jay Rehak, current president of the CTPF Board of Trustees. "His financial acumen helped guide the CTPF decision-making process for decades. Those decisions will continue to benefit our members for years to come."
Mr. Ward was a dedicated advocate for retirees and pension members. He was proud to have worked on HB1269 in 2003 providing retired teachers an increase in funding for health insurance. He also advocated for a law requiring a vote of all pension fund members before Fund assets could be merged into another government agency.
During his lifetime he served as President and first Executive Director of the Retired Teachers Association of Chicago, Vice President for the CTU Retiree Functional Group, CTU Pension and Insurance Committee member, and CORE member. He represented CTU members before the Illinois Legislature, the City Council, and various state and local committees and commissions. He was a regular speaker before faculty and retiree groups for decades.
We extend our sympathy to his family, friends and colleagues during this time. Mr. Ward was a fixture in the community for many decades and sincerely cared for the people he served.
CTPF Files Suit Against Investment Banks
November 25, 2015: The Chicago Teachers' Pension Fund filed a lawsuit in federal court charging some 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. This action harms investors in one of the world's biggest financial markets. Led by the Chicago Teachers' Pension Fund, investors seek an injunction to put an end to this anti-competitive arrangement, and damages to compensate them for the losses they suffered.
"The Chicago Teachers' Pension Fund maintains a long history of being the initiator on issues to improve the lives of our members," explained Jay C. Rehak, president of the CTPF Board of Trustees. "We view this action as necessary to protect the long-term interests of our members and their financial security."
Interest rate swaps, regularly used by a broad spectrum of investors, including pension funds, university endowment funds, hedge funds, and municipalities, allow an entity to swap its fixed interest-rate payments for the floating interest-rate payments of a benchmark, or vice-versa. When used appropriately, interest rate 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.
Many other financial products including stocks and foreign currency trade on electronic exchanges. This offers transparent and competitive pricing and faster execution, lowering the cost to investors. The complaint alleges that the banks used their power to stop competitors from bringing exchange trading to the IRS market – keeping prices for trades artificially high. As a result, CTPF paid more for IRS trades than they would have in a competitive market.
"The best way to address this monopolistic practice is to file this suit on behalf of the market as a whole and fund managers everywhere. We expect other large investors to join us in addressing this critical market issue," said Rehak.
CTPF is represented by Cohen Milstein Sellers & Toll PLLC and Quinn Emanuel Urquhart & Sullivan, LLP. Jacobs Burns Orlove & Hernandez is additional counsel. Click here for more information about Public School Teachers' Pension and Retirement Fund of Chicago v. Bank of America Corporation et al.
Reuters: Big Banks accused of rate-swap fixing in class action suit.
Pension and Investments Online: Chicago teachers' fund sues investment banks over interest-rate swaps
Bloomberg Online: Big Banks Accused of Monopolizing Interest Rate-Swap Market
Established by the Illinois state legislature in 1895, the Chicago Teachers' Pension Fund manages members' assets and administers benefits. The $10.9 billion pension fund serves approximately 63,000 active and retired educators, and provides pension and health insurance benefits to more than 27,700 beneficiaries.
Officers and Standing Committee Chairs Named
During their November 20, 2015, meeting, the CTPF Board of Trustees elected officers and selected committee chairs for 2015-2016.
Jay C. Rehak, president
Lois W. Ashford, vice-president
Robert F. Bures, recording secretary
Bernie Eshoo, financial secretary
Chairs of Standing Committees
Investments, Tina Padilla
Claims and Service Credit, Jeffery Blackwell
Finance and Audit, Bernie Eshoo
Pension Laws and Rules, Lois W. Ashford
2016 Medicare Rates Announced
The Social Security Administration (SSA) has announced that there will be no COLA (cost of living allowance) adjustment for 2016. This will result in an increase in the Medicare B premium for a select group of Medicare recipients. The Medicare law contains a “hold harmless” provision that protects the approximately 70 percent of beneficiaries who receive Social Security benefits.
Will My Medicare Part B increase?
If you are a member of any of these groups, your rate will go up:
- Higher income beneficiaries subject to an income-adjusted Part B premium
- Beneficiaries who do not collect a Social Security benefit
- Beneficiaries who will become eligible for Part B in 2016
- Beneficiaries receiving a Social Security benefit that is not large enough to pay for the Medicare B premium
How much will I pay for Medicare Part B in 2016?
If you are not subject to the increase, you will continue to pay a Medicare B premium of $104.90 per month in 2016. CTPF will pay a monthly subsidy of $52.45.
If you are subject to an increase, CTPF will subsidize 50% of the base premium or $59.40. The Medicare Part B cost includes a base premium of $118.80, plus a government surcharge of $3.00. The surcharge is not eligible for subsidy.
How do I get the increased subsidy?
If you participate in CTPF’s MEDPAY program, you will automatically receive the increase and you do not have to take any action. If your rate is going up and you make Part B payments directly to Medicare, you must submit proof of the increase to CTPF.
What kind of proof must I submit?
Acceptable proof includes any document issued by the Centers for Medicare and Medicaid Services (CMS) or the Social Security Administration (SSA) detailing your name, address, and 2016 Medicare B cost.
What is the deadline?
The initial deadline for submitting proof of an increased premium is February 29, 2016. Applications received by this date will be processed retroactively to January 1, 2016.
What if I miss the deadline?
If you miss the initial February 29, 2016, deadline, you can still submit your proof by the 10th of any month, and we will process your new subsidy amount for the next month’s payroll. You will not, however, receive a retroactive payment.
Where do I send proof of my Medicare B cost increase?
- Mail - CTPF, 203 N LaSalle, Suite 2600, Chicago, IL. 60601-1231 ATTN: Health Benefits
- Fax – 1-312-641-7185
- Email – firstname.lastname@example.org
Medicare Part A Cost
If you must pay for Medicare Part A, the 2016 monthly premium will be $411 and the CTPF monthly subsidy will be $205.50
Where can I find more Medicare information?
Press releases of Medicare updates can be found here.
2015 CTPF Board of Trustee Election Results
Teachers and other active contributors elected two Trustees who will serve three-year terms from November 2015 - November 2018.
Three candidates were certified to run for two open positions. The following individuals received the highest vote totals, as certified by Election Services Corporation, and were elected. Teachers are listed in alphabetical order:
Lois W. Ashford
Jay C. Rehak
Six candidates were certified to run for three open positions. Pensioner Trustee ballots postmarked by November 6, 2015, will be counted in the final tally. Preliminary results are reported here and will be finalized on November 11. Pensioners are listed in alphabetical order:
CTPF Health Insurance Open Enrollment 2016
The Open Enrollment Period for 2016 health insurance ended October 31, 2015. All changes made during Open Enrollment will become effective January 1, 2016.
CTPF and After School Matters Partner on Student Fine Arts Contest
As Chicago Teachers' Pension Fund celebrates its 120th Anniversary year and looks towards the future, the Fund has partnered with After School Matters to host a Fine Arts Contest for students to commemorate the occasion.
Theme: My Vision for Education in the Year 2135
Students are encouraged to think, dream, and create in media or form of expression (visual or performing arts) that will capture the image, spirit, or possibilities of education in the year 2135. What will a classroom look like? How will students travel to class? What will they study? We want to see the future through the eyes of today's students.
All students currently enrolled in a Chicago Public /Charter Schools, grades 7 – high school are eligible to participate.
Forms of Fine Arts: any type of drawing, painting, sculpture, architecture, music, poetry, video (documentary or spoken word), photography and writings (essay or poem), will be eligible for the contest.
Tuesday October 13, 2015, contest begins
Friday, November 13, 2015 at 5:00 p.m., all submissions due to CTPF
November 16th – November 18th, judging takes place
November 20th - winners finalized and announced during CTPF Board of Trustees Meeting
December 10, 2015, finalists and award winners will be invited to the CTPF Board of Trustees Meeting for special recognition.
Drop Off Locations:
Chicago Teachers Pension Fund
203 North LaSalle Street Suite 2600
Chicago, Illinois 60601
Open Enrollment Runs October 1-31, 2015
CTPF offers health insurance benefits to retired members whose final teaching service was CTPF, and their eligible survivors/dependents. CTPF holds an annual Open Enrollment Period, October 1-31, when retirees can:
- Enroll in a health insurance plan for the first time
- Add a dependent to a CTPF plan
- Change a health insurance plan or carrier
Changes made October 1-31, 2015, become effective January 1, 2016. Click here to go to the Open Enrollment Central page with additional information.
Open Enrollment Assistance
CTPF offers Health Insurance Open Enrollment Webinars and Seminars which offer an overview of 2016 health plan choices and changes. Webinars and Seminars have the same information, and are designed to make sure you have the information you need to make an informed decision about your 2016 health care. See below for Webinar and Seminar registration details.
WEBINARS Now Available Online
2016 Open Enrollment Webinars the same information presented during seminars, including a summary of information about plan choices, changes, and costs.
Medicare Eligible Members Webinar
CTPF offered a live webinar for Medicare eligible members on October 1, 2015. This webinar included information about health insurance plans for members who are eligible or will become eligible for Medicare in 2016. Download and watch the webinar at the link below.
Click here to view the webinar
Clikc here to view the presentation from the Medicare Eligible Webinar.
Non-Medicare Eligible Members Webinar
CTPF offered a live webinar for non-Medicare eligible members on October 2, 2015. This webinar included information about health insurance plans for members who are not eligible for Medicare in 2016. Download and watch the webinar at the link below.
Click here to view the webinar
Click here to view the presentation from the Non-Medicare Eligible Webinar
SEMINAR Registration Now Open
CTPF will offer four Open Enrollment Seminars in October. Click this link to register. The information presented will be the same on both days, only register for one seminar.
Open Enrollment Seminar Schedule
Tuesday, October 6
Hilton Oak Lawn*
9333 South Cicero Ave.
Oak Lawn, Illinois 60453
- 9:00 a.m. Medicare plans
- 1:00 p.m. Non-Medicare plans
Free parking available. Click here for parking and transit information.
Thursday, October 8
Harold Washington Library*
Cindy Pritzker Auditorium, Lower Level
400 South State Street
Chicago, Illinois 60605
- 9:00 a.m. Medicare plans
- 1:00 p.m. Non-Medicare plans
September 22, 2015, Statement by Charles A. Burbridge
On behalf of CTPF and our members, I want to pay tribute to and recognize Illinois State Representative Esther Golar, who passed away on September 21, 2015.
The voice of the 6th District for the past nine years, Representative Golar represented nearly 1,000 CTPF members. An activist and advocate, she fought for her constituents, her community, and her city. She focused her work on improving housing and education and fought for services for the most vulnerable members of our community. She raised her voice for those who struggled to be heard.
While many of our members called her district home – they were not simply constituents to her – they were her friends. Her leadership and support consistently reflected the idea that teachers form the foundation of strong communities, and she worked tirelessly to support the interests of our members.
Representative Golar well understood the impact that decisions in Springfield have on people and neighborhoods and she sponsored several legislative initiatives important to the Fund. House Resolution 816, introduced during the 98th General Assembly, called attention to the State’s responsibility to fund CTPF. Another critical measure, House Bill 1484 which she co-sponsored with Majority Leader Barbara Flynn Currie (and 11 other co-sponsors), was one of the first bills that gave serious consideration to having the State of Illinois pay CTPF’s normal costs.
While Representative Golar supported us legislatively in Springfield, she went a step further – working to educate her peers and colleagues about pensions and CTPF.
We were honored to host her and the Black Caucus in 2012, when she held an unprecedented meeting dedicated to pension issues. Following the success of that meeting, Representative Golar hosted a meeting of the Latino Caucus in our offices. She made sure that her peers understood and appreciated the importance of teachers in the City of Chicago. She believed in promises, and in Chicago’s teachers.
Many were touched by Representative Golar’s kindness, wisdom and generosity of time and talent. We will miss her greatly and offer our sincere condolences to her family, friends, and community.
Pictured above, State Representative Esther Golar with Bukola Bello, CTPF lobbyist, and Kevin B. Huber, former CTPF executive director, following the 2012 Black Caucus meeting.
September 16, 2015, Chicago Tribune commentary: How to protect teachers and taxpayers in the pension crisis
By Charles A. Burbridge, executive director of the Chicago Teachers’ Pension Fund
In 1905, the Chicago Teachers' Pension Fund faced a crisis. There wasn't enough money coming in to pay for retirement benefits.
The president of the pension fund, Jane Addams — yes, the famous community organizer — turned to the Illinois General Assembly for help. A landmark law passed in 1907 required employees and employers to contribute to the fund and set up an elected pension board to oversee investments.
The retirement security that Addams protected for teachers is at risk again.
Pension holidays taken by Chicago Public Schools and approved by lawmakers have capsized the system and will cost taxpayers billions of dollars to correct. It's just the kind of action Addams sought to guard against more than 100 years ago.
We must protect our teachers and the taxpayers from these shortsighted decisions.
The first step: Stop talking about CPS declaring bankruptcy. That's a diversion from the real issues of education policy and funding. CPS bankruptcy — essentially allowing the state to insulate itself from the problem that it helped create — would be morally reprehensible. There are many parties responsible for this crisis. No one should be allowed to simply walk away.
The second step: Take three legislative actions to fix the system and prevent future funding failures. Those three actions are:
- Make payments to the Chicago Teachers' Pension Fund mandatory by law. Pension funds across the country have something in common: Payments are mandated and the funds have strong tools to use if a payment is missed. Pension payments are not optional; they are promised to Chicago's schoolteachers as part of their contract. We have to stop pitting today's teachers against yesterday's teachers. Lawmakers, city and school leaders must recognize that teacher compensation and retirement funding are one in the same.
- Commit to an actuarial-based funding plan that covers annual contributions and unfunded liability. Fully funded pension plans let experts (actuaries) determine the annual contribution needed to keep the plans stable. The Chicago teachers' fund is in a hole. We must stop digging. The problem was created by pension holidays. It can't be solved by more pension holidays.
- Make monthly payments to the pension fund, not a once-a-year payment. Pension plans work when today's benefits are paid by yesterday's contributions and investment earnings, and today's contributions are invested to pay for tomorrow's benefits. Prudent investment practices demand that payments to the fund provide a constant stream of revenue that can be invested throughout the year. Monthly payments would save Chicago taxpayers tens of millions annually.
A century ago, Addams knew that for Chicago to thrive, teachers' pensions needed to be protected. If we are to thrive for the next century, that fundamental principle must never again be forgotten.
Charles A. Burbridge is executive director of Chicago Teachers' Pension Fund.
SB 318 Update
August 18, 2015, the Illinois House Revenue and Finance Committee held a subject matter hearing on Senate Bill 318. CTPF opposes this legislation which underfunds pensions by $540 million and extends the payment period to 2063.
CTPF Executive Director Charles A. Burbridge testified at the hearing in Chicago. Burbridge stated the Fund's opposition and highlighted the need for an amended bill which fully funds pensions for CTPF.
"We appreciate the attention that the Revenue and Finance Committee has brought to this issue," said Burbridge. "We used this opportunity to reflect on the mistakes of the past, and to educate legislators about the current state of CTPF. We stated our opposition to the pension 'holiday' in this legislation, and made it clear that our members oppose legislation which underfunds pensions."
CTPF will continue to monitor this legislation and will keep members informed on the status of the bill.
ACT NOW: Oppose SB 318
Please reach out to your State Representative and ask them to VOTE NO/PRESENT on SB 318. CTPF opposes this legislation which underfunds pensions. CTPF cannot afford another pension "holiday."
SB 13 Update
This morning, August 12, 2015, CTPF Executive Director Charles A. Burbridge testified against SB 318 during an Illinois House Executive Committee meeting in Springfield, Ill. Burbridge objected to the partial pension "holiday" in the bill, and reiterated the need for legislation which fully funds pensions for CTPF. The hearing adjourned without taking action on the bill.
ACT NOW: Oppose Senate Bill 318
Senate Bill 318 passed out of the Illinois Senate on August 4, 2015, and was sent to the Illinois House.
Rep. Barbara Flynn Currie (D-Chicago) has sponsored the legislation in the House, and it will be heard in the Executive Committee this Wednesday, August 12, 2015.
CTPF opposes Senate Bill 318 which combines provisions from two other bills, SB 316 and HB 3695. The bill:
- requires the State of Illinois to pick up the "normal cost" contributions for CTPF,
- reduces the CPS required contribution for FY 2016 and FY 2017,
- extends the time CPS has to fully fund pensions by four years to 2063, and
- restores the pension tax levy
Call to Action
This bill will be heard in the House Executive Committee on Wednesday, August 12, 2015. Please reach out to the Executive Committee members and your State Representative and ask them to VOTE NO/PRESENT on SB 318.
CTPF opposes this legislation which underfunds pensions. CTPF cannot afford another pension "holiday."
A Message from Charles A. Burbridge, CTPF executive director
This weekend, the Chicago Tribune published an editorial from Forest Claypool, executive director of the Chicago Public Schools.
We appreciate Mr. Claypool's willingness to hit the ground running, and to try and address the serious financial issues that face the Chicago Public School system.
As executive director of the Chicago Teachers' Pension Fund, with a fiduciary responsibility to our Fund and its members, I agree that Chicago taxpayers should not be forced to choose between educating children and paying teacher retirements. I want to make it clear that fully funding pensions is part of the cost of educating our children. A teacher's contract includes the promise of a pension, and we know from recent court rulings that those promises must not be broken.
Unfortunately, the proposals currently being offered, without significant changes, fall short of fully funding pensions for retirees. We know that there aren't any shortcuts or easy solutions, but the problem can be solved. CTPF needs guaranteed actuarially based employer funding. The Illinois Municipal Retirement Fund (IMRF) provides an excellent example of the difference this makes. IMRF employers are required to make appropriate contributions. IMRF can take legal action to recover payments if the employer fails to make the required contributions - and this guarantee has shielded their organization from funding holidays and underpayments. Their current funded ratio is above 90%. CTPF, after two decades of underfunding and pension "holidays" hovers just above 50%.
We know that when the employer is required to make payments, the pension system works. An increase in state contributions and the reinstatement of our tax levy are important steps toward full funding.
Partial payments, pension holidays, and budget "relief" for CPS only exacerbate our current condition, and cannot substitute for revenue. We look forward to a pension funding solution which remedies the mistakes of the past and restores a solid foundation for the future.
July 15, 2015, 3:30 p.m. Update: SB 316, Amendment 2, Fails
Illinois Senate legislation would have reduced CTPF funding by $536 million over 2 years
Legislation which would have reduced the CPS contribution to CTPF by $536 million during the next two fiscal years failed to pass out of the Illinois Senate this afternoon. The final vote was 32 yes and 22 present. The legislation needed 36 votes to pass.
CTPF opposed Illinois Senate Bill 316, Amendment 2. Note: Amendment 2 modified and replaced Amendment 1 which was filed last week by Senate President Cullerton. The bill required the State of Illinois to pick up the "normal cost" contributions for CTPF in FY 2016 and FY 2017, and included a State contribution for retiree health insurance, but reduced the CPS required contribution for FY 2016 and FY 2017 by $536 million. The legislation also extended the time CPS had to fully fund pensions by four years to 2063.
July 15, 2015, CTPF Opposes SB 316, Amendment 2
CTPF opposes SB 316, Amendment 2, legislation which reduces the CPS contribution by $536 million for the next two fiscal years. Note: Amendment 2 was introduced today. It modifies and replaces Amendment 1 which was filed last week by Senate President Cullerton.
The bill requires the State of Illinois to pick up the "normal cost" contributions for CTPF in FY 2016 and FY 2017, and includes a State contribution for retiree health insurance, but reduces the CPS required contribution for FY 2016 and FY 2017 by $536 million. The legislation also extends the time CPS has to fully fund pensions by four years to 2063.
Call to Action
CTPF asks members to reach out to members of the Illinois General Assembly and ask them to oppose this legislation which underfunds CTPF by $536 million. CTPF cannot afford another pension "holiday" or relief. Call or send an e-mail NOW:
July 10, 2015: CPS and Chicago Teachers' Pension Fund Reach Mutual Agreement to End Discussions on a Proposed Pension Payment Schedule
CHICAGO – Chicago Public Schools (CPS) and the Chicago Teachers' Pension Fund (CTPF) announced today that the organizations have reached a mutual agreement to end discussions on CPS's proposed Fiscal Year 2016 (FY16) pension payment schedule.
"In recent days, CPS and CTPF leadership have engaged in open, productive conversations regarding a potential modified payment arrangement," said CPS Interim CEO Jesse Ruiz. "After exploring various options and identifying potential benefits for both sides, we have mutually decided to end these discussions. CPS is committed to exploring all options on the table to resolve its structural deficit while working with its partners in Springfield on a solution to the District's significant financial challenges."
"After meeting for a number of open conversations regarding potential solutions to the District's cash-flow difficulties, we have come to the mutual conclusion that an agreement cannot be reached at this time," said CTPF Executive Director Charles Burbridge. "These conversations provided us with a constructive dialogue that clearly laid out each organization's needs. We have concluded that alternative options will need to be explored in order to resolve CPS's budget deficit while providing security for our members."
Chicago Public Schools serves 396,000 students in 664 schools. It is the nation's third-largest school district. Established by the Illinois state legislature in 1895, the $10.9 billion Chicago Teachers' Pension Fund serves more than 63,000 active and retired educators.
July 10, 2015, ACT NOW: Oppose SB 316, Amendment 1
CTPF opposes SB 316, Amendment 1, introduced by Illinois Senate President John J. Cullerton on June 30, 2015.
This legislation will be considered by the General Assembly on Tuesday, July 14, 2015. The measure passed out of the Illinois Senate Executive Committee on a vote of 9-5-2 (click here to see the vote) on July 1, 2015.
The bill requires the State of Illinois to pick up the "normal cost" contributions for CTPF, but reduces the CPS required contribution for 2016 and 2017. The legislation also extends the time CPS has to fully Fund pensions by four years to 2063.
Call to Action
Please contact your elected representatives to oppose this legislation which fails to fully fund CTPF.
Click here to send a message from CTPF's Legislative Action center.
July 10, 2015, Rauner Pension Reform Proposal
Governor Rauner held a press conference on Wednesday, July 8, 2015, where he proposed changes to many of the pension systems in Illinois including CTPF, and introduced a host of other legislative initiatives. CTPF is closely monitoring the proposal and will share additional information as it becomes available.
CPS Funding Proposal Update - July 6, 2015
July 1, 2015, in a CTPF Board of Trustees Meeting, representatives from the Chicago Public Schools (CPS) and the City of Chicago presented a proposal to establish a plan for funding CTPF in the event CPS is delinquent in making its statutorily required employer pension contribution for Fiscal Year 2016.
"Under the current statute, CTPF receives revenue once a year on the last business day," said CTPF Executive Director Charles A. Burbridge. "We are not negotiating a loan. The proposal provides a remedy in the event that CPS defaults on the statutorily required payment."
This matter has been referred to a subcommittee of the Board of Trustees. Discussions between CPS and CTPF are ongoing.
CPS Offers Funding Proposal to CTPF
This morning the Chicago Teachers' Pension Fund (CTPF) Board of Trustees met in a special meeting where representatives of the Chicago Public Schools (CPS) presented a proposal to create a short-term employer payment plan. At the meeting, CPS Interim Chief Executive Officer Jesse Ruiz, Chief Administrative Officer Tim Cawley, and the City of Chicago's Chief Financial Officer Carole Brown outlined a proposal which would not reduce pension funding, but would help CPS close a $500 million budget gap for 2016.
Under the terms of the proposal, CPS would discontinue its practice of making a single annual pension payment on the last business day of the year and would instead make monthly payments to CTPF, beginning in January 2016 and continuing for the next 10 years.
This new funding schedule would defer approximately $500 million of the FY 2016 payment into the FY 2017 fiscal year. The proposal requires CPS to pay interest at 7.75% on the deferred amount and requires $750 million in collateral to secure the agreement.
Following a period of discussion and debate, the board voted to communicate its general support for the proposal, and authorized a subcommittee of the Board of Trustees to continue negotiations and discussions with CPS. The subcommittee is expected to meet in July and will make a recommendation to the full board later this month.
"We were encouraged to see representatives of CPS at our meeting this morning and appreciate the opportunity to openly discuss payment security for the Fund," said CTPF Board of Trustees President Jay C. Rehak. "While we still have concerns about this proposal, we look forward to working through these issues so that our members' interests are protected and our Fund receives all the revenue necessary to meet the pension commitments made by CPS."
"Under the current statute, CTPF receives revenue once a year, on the last business day," said CTPF Executive Director Charles A. Burbridge. "This proposal revises the payment schedule, but ensures that we have a monthly revenue stream and provides security and interest on a deferred amount, which is reassuring for our members."
The subcommittee is expected to make a recommendation in advance of the full board meeting on July 16, 2015.
Burbridge Interviewed on Chicago Tonight
CTPF Executive Director Charles A. Burbridge appeared on the WTTW news magazine "Chicago Tonight" on June 30, 2015. Burbridge was interviewed by host Phil Ponce about the recent CPS payment and the funding issues facing CTPF. Click the link below to view the segment.
CPS Payment Update, June 30, 2015, 6:00 p.m.
"This afternoon we received the full pension payment from the Chicago Public Schools for Fiscal Year 2015," said Chicago Teachers' Pension Fund Executive Director Charles A. Burbridge.
"Full funding is essential to the health of our Fund and the financial stability of our 63,000 members.
"July 1, 2015, the Fund will celebrate its 120th anniversary, and we reflect on this anniversary knowing that we have never failed to make a pension payment to our members. We have endured wars, recessions, depressions, and countless other events, and have always delivered the promise of a pension.
"I hope that the policy makers recognize the need to address education funding so that teachers do not need to choose between teaching security today and retirement security tomorrow. The need for long-term solutions is not erased with this payment."