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CTU report says pension overhaul would hurt city’s economy, retirees

Chicago Teachers UniPresident Karen Lewis  |  Rich Hein/Sun-Times

Chicago Teachers Union President Karen Lewis | Rich Hein/Sun-Times

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Updated: March 18, 2014 6:21AM

They’re calling it “the Great Chicago Pension Caper.”

And the Chicago Teachers Union is sending a message to lawmakers: Forget about using the same pension overhaul that passed last year on city pension funds.

A new study released by the CTU on Monday said that if the same pension reform, known as Senate Bill 1, is applied in the city, it would slash the pensions of city public workers, harm retirees and negatively impact the city’s economy.

The study also claims that black, middle-class city workers will be the hardest hit by reductions in retirement benefits.

CTU President Karen Lewis said there will be “unintended consequences of misguided pension reform.”

“SB 1 and proposals similar to this will not fix the problem,” she said. “. . . We must put an end to this pension caper so that people can survive in an economy that is not kind to older Americans.”

Earlier this month, Illinois Senate President John Cullerton, D-Chicago, said Chicago Public Schools’ teachers will need to give up some benefits during upcoming pension system negotiations, or they will run the risk of “thousands and thousands” of layoffs.

Cullerton said at the time that the public schools’ annual pension payment is expected to swell $417 million over the amount paid last year, to $613 million. He declined then to discuss specifics of any bill he ultimately would like to see passed by the Illinois Legislature.

But he said last year’s pension overhaul, which is slated to save $160 billion over 30 years, would provide a good framework.

A Cullerton spokeswoman did not respond to a request for comment over the weekend.

Public-sector unions affected by the pension overhaul have sued to overturn the law passed last year.

Chicago Mayor Rahm Emanuel wants lawmakers to impose the same pension reforms on Chicago teachers that they did on teachers in the suburbs and Downstate.

In an emailed statement Sunday evening, CPS chief Barbara Byrd Bennett said: “The solution to this must provide a secure retirement for our teachers and retired educators, protect our children from unconscionable cuts to the classroom and looks out for taxpayers and homeowners in every neighborhood who struggle to make ends meet. This is not the time for divisive or misleading tactics such as the ones being used here. Instead, we need a balanced approach to solve the biggest financial threat our city and school system have ever seen.”

Meanwhile, the CTU and other public-sector unions that represent city workers formed a coalition to fight a so-called “pension heist,” Lewis told the Chicago Sun-Times last month.

In the new report, the CTU said retired teachers could see an average cut of $700 a month if SB 1-like provisions are passed for the teacher’s fund.

It also claims that black, middle-class, city workers would be the hardest hit and that the Beverly and Morgan Park neighborhoods would see the biggest impact of pension cuts.

“Public service jobs have been a major path to stable, middle-class employment and retirement for people of color in Chicago when other doors were slammed shut,” the report said.

The cuts would affect businesses and the economy because retirees would have less money to spend, the report said. The CTU said the proposed cuts to Chicago retirees would amount to about $270 million slashed from retirement income over five years.

The CTU said a solution to the pension crisis requires “a sea-change in how revenue is generated for public services.”

And it said city leaders need to “reassess their commitment to the majority of our residents who live outside of the loop and the Gold Coast.”

The union said solutions include closing corporate tax loopholes and a slight increase in the city’s property tax rate.

Contributing: Fran Spielman


Twitter: @schlikerman

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