CHICAGO Aug 22 The $6.6 billion proposed fiscal
2014 budget for the Chicago Public Schools is unsustainable and
the district's fiscal health will continue to deteriorate absent
pension reform, according to an analysis by a government finance
watchdog group on Thursday.
The Chicago-based Civic Federation said it does not support
the school spending plan, which helps close a $977 million
deficit by draining $696.6 million in reserves, noting that
budget gaps of nearly $1 billion are already projected for the
next two fiscal years.
The city-run school system's contribution to pensions will
triple to $600 million in fiscal 2014 due largely to the
expiration of a three-year partial pension funding holiday
passed by the Illinois Legislature in 2010, the analysis said.
The payment in fiscal 2013, which ended on June 30, was $196
Meanwhile, the funded level of the Chicago Teachers' Pension
Fund fell to 54.5 percent in fiscal 2012 from a healthy 81.2
percent in fiscal 2003 on a market value basis.
"The district knew this budget crisis was coming and should
have been aggressively advocating for their own pension reform
proposal tied to a long-term financial plan to stabilize their
budget," said Laurence Msall, president of the Civic Federation
in a statement.
The nation's third-largest public school district has been
waiting along with the city of Chicago and other local
governments for Illinois lawmakers to address ballooning pension
costs. Chicago Mayor Rahm Emanuel, who lobbied the state
legislature last year for pension reform, is closing 48 schools,
the largest mass public school closing in U.S. history. In May
he laid off 3,000 employees, 1,000 of them teachers, as part of
a cost cutting effort.
Legislators have been unable to reach a consensus on dealing
with the state's own $100 billion unfunded pension liability. A
bipartisan panel of lawmakers has been meeting since June, with
no visible sign of progress toward any deal.
The school system said its deficits were being driven by the
lack of pension reform.
"We will continue to rigorously push for pension reform as we
did last session and hope that union leadership will come to the
table willing to support the kinds of reforms necessary to
provide significant financial relief for our schools while
keeping the pension system viable and sustainable for current
and future retirees," the district said in a statement.
The Civic Federation said it supports some elements in the
schools' budget, including $111.6 million in management
efficiencies and cost-savings outside the classroom and an
increase in the property tax levy to the maximum amount allowed
by state law.