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Over those three years of partial pen-sion holidays, CPS was allowed to contrib-ute less than the actuarially recommendedamount to the pension. When the pensionholidays end in scal year 2014, the city’s an-nual teacher pension contribution is set toincrease by more than 225 percent to $684million, up from $208 million in scal year2013
. After this increase in the level of pen-sion contributions, Chicago’s teacher retire-ment expenditures will equal 49 percent of the PK-12 education funding CPS receivesfrom the state.In 2010, CPS predicted 40-student class-rooms and school closures because of a direbudget situation, so the district’s CEO at thetime, Ron Huberman, asked the state for apension reprieve
. While the pension holi-days may have seemed like budget relief forCPS, it only delayed the inevitable pensionavalanche facing Chicago. Pension holidayssimply kick the can down the road, but theproblems do not go away. Without lasting solutions, there will be doomsday predic-tions for Chicago schools year after year.CPS is not the only Chicago pension fundthat will be facing budgetary challenges inthe future. Graphic 4 (page 4) shows thatother Chicago pension funds have paymentsset to signicantly increase.In order to meet its growing obligations andclose a $636 million gap in its overall budgetthis year, the city made some tough budgetcuts and increased nes and fees.
As Graph-ic 4 shows, police and re pension contribu-tions will increase, putting further pressurefuture city budgets. Trying to squeeze morerevenue out of Chicago taxpayers couldpush even more residents out of the city.Between 2000 and 2010, data from the U.S.Census Bureau shows that Chicago’s popu-lation decreased 6.9 percent
. Chicago localgovernments need the benet exibility thatis only available through pension reform.
Pension holidays simply kickthe can down the road, but the problems donot go away.Without lasting solutions,there will be doomsday predictions for Chicagoschools year after year.
Source: Commission on Government Forecasting and Accountability, the Chicago Board of Education and Illinois Policy Institute calculations. See appendix for more information.