The Chicago Teachers’ Pension Fund Sends Letter to State of Illinois Asking for Additional Financial Contributions to Support Pensions


The Chicago Teachers’ Pension Fund (CTPF), along with The Chicago Teacher’s Union (CTU), the Retired Teachers Association of Chicago (RTAC) and the Chicago Principal’s Association (CPAA), wrote on behalf of 92,000 members to ask the State of Illinois to provide additional financial contributions to support CTPF Pensions. 

In the letter, the leaders of these organizations highlight CTPF’s funded ratio of 46.8% and $13.8 billion in unfunded liabilities, primarily due to a long history of inadequate contributions from their primary employer and the failure of the State of Illinois to adhere to its promise to equitably fund Chicago Teachers’ pensions.  

Illinois law specifies that funding for Chicago teachers’ pensions shall be a combination of employer contributions, state appropriations, employee contributions, and earnings on investments (40 ILCS 5/17-127). Prior to 1995, CTPF was funded by a designated tax levy. A funding crisis at the Chicago Public Schools in the mid-1990s fundamentally changed the structure of pension funding. CPS administrators in need of operating revenue supported legislation, enacted in 1995, which allowed the school district to use money previously earmarked for pensions (the tax levy) for operating costs. 

The State of Illinois did not appropriate funds consistent with its goal and intent. Instead, between 1995 and 2016, State funding for CTPF dropped to less than 1% of the funding provided to TRS. If the State had appropriated funds proportionate to just 20% of TRS’s appropriations, CTPF would have received an additional $5.95 billion in funding. 

CTPF lost an estimated $2 billion in revenue that it would have received from the pension tax levy from 1996 through 2005. When CPS was required to make substantial payments in 2010, PA 96-0889 granted the Board of Education an additional $1.2 billion in pension “relief” from 2011-2013 and extended the pension funding schedule by an additional 14 years to 2059. The extension of the funding period increased the cost to taxpayers by an additional $12 billion. 

CTPF is a long-term investor, and over the past 35 years has earned 8.5%, exceeding its target return of 6.5%. Lacking stable sources of revenue, CTPF had to liquidate assets it would have invested, and relied on investment earnings to pay pension obligations. Improvements began when legislation was signed in 2016 and 2017 (Public Act 99-521 and Public Act 100-465), reestablished the tax levy, established the State’s obligation to fund the normal cost of CTPF pensions, and provided CTPF health insurance funding. 

Fully funding CTPF pensions will ensure that those who have invested a lifetime in service to Chicago's youth will receive the benefits they have earned.