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Paying for the new teacher contract

Updated: October 22, 2012 6:23AM

Mayor Rahm Emanuel could go a long way toward paying for the new teachers contract — without closing schools, raising class size or laying off teachers — by reversing financial maneuvers he ordered last year to prop up the city budget.

Emanuel stripped teachers of a previously negotiated, 4 percent pay raise and used the $80 million in savings to pay the Chicago Police Department retroactively, going back to 2009.

That helped the mayor solve his own budget crisis because it was roughly $70 million more than CPS had originally agreed to reimburse the city for police services in schools.

Emanuel also called a halt to the city’s longstanding policy of subsidizing pensions for non-teaching CPS employees.

In 2012, the mayor ordered CPS to reimburse the city for half of those annual pension costs — $16.2 million — and to assume the entire, $32.5 million-a-year expense in 2013 and beyond.

To help wean the public schools off its pension dependency on the city, Emanuel declared a $60 million surplus in the city’s 159 tax-increment-financing (TIF) districts. CPS got $30 million of that money. The city got $12.5 million.

“We pay the pensions for CPS employees who are non-teachers. Nobody can explain why. So, I said, ‘It’s not the whole thing but in the first year, you’re gonna give back at least half of it,’ ” Emanuel told the Chicago Sun-Times editorial board at the time.

“I’m dealing with it by dealing with the TIF piece. I thought that was the right, judicious and smart way to do it.”

The question now is whether Emanuel is willing to reverse either of those maneuvers to help defray the $295 million, four-year cost of the new teachers contract and ease pressure on a school system that has drained every penny of its reserves and faces a $1 billion shortfall next year.

Kathleen Strand, a spokesperson for the city’s Office of Budget and Management, disclosed Thursday that this year’s pension payment already has been waived. “Because of our reforms, spending controls [and higher-than-expected revenues], the city’s 2012 budget has yielded some additional surplus, so the $32.5 million was not needed,” she said.

Asked whether Emanuel was prepared to continue the pension break, Strand said, “The mayor realizes the difficult challenges CPS faces with their budget. The city has its own fiscal challenges and the cost for CPS non-teacher pensions should ultimately be shifted to CPS books. But this needs to be folded into an ongoing larger pension discussion as both agencies are in need of substantial pension reforms.”

Civic Federation President Laurence Msall argued that the pension and police expenses belong to the schools, no matter the financial consequences. “Yes, he could reverse it and assume those responsibilities,” Msall said. “But that would just be the city stepping in to pay for costs the city can’t afford. The city faces an enormous structural deficit of its own. It would be a short-term solution with long-term implications for both the district and municipal government.

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