CHICAGO (Reuters) - Chicago Mayor Rahm Emanuel on Wednesday called on the Illinois Legislature to make fundamental changes to the funding of teachers pensions to stop the financial free fall at the city's public school district.
Emanuel offered two solutions. One would create a uniform pension system for all teachers in the state, replacing a separate fund for Chicago.
The other plan would require the state to fund a bigger chunk of Chicago teachers' pensions, while the teachers would pay an additional 7 percent of their salary that is currently covered by the Chicago Public Schools (CPS) - a proposal that has already been met with hostility from the Chicago Teachers Union.
The mayor has continuously spoken out against what he calls a funding inequity in which Illinois pays for the bulk of teacher pensions in every school district but Chicago.
For fiscal 2015, which ended on Tuesday, the state appropriated $3.5 billion for the state-wide Teachers Retirement System and just $62.1 million for Chicago's fund, according to documents from the Chicago Teachers' Pension Fund.
"It's time to finally fix the problem permanently," Emanuel told reporters.
Emanuel also said the Illinois Legislature should increase education funding by 25 percent, and floated the possibility of a $175 million property tax increase to create new revenue.
CPS, the nation's third-largest district, is facing another round of spending cuts after making a $634 million state-mandated payment to its teachers' retirement fund. Interim Chief Executive Jesse Ruiz said the cuts, totaling $200 million, will eliminate 1,400 jobs, cutting into athletic programs, high school class start times and building repair and maintenance. Class sizes will not be affected.
District officials said they tapped borrowed money, including $200 million of tax anticipation notes approved last week by the Chicago Board of Education, to make the pension payment.
They also confirmed the school system is seeking a $500 million break from the teachers' fund from its fiscal 2016 payment. Under that plan, CPS would repay the money in fiscal 2017 at a 7.75 percent interest rate and make its required pension payments monthly instead of annually beginning in January. The teachers' fund board advanced the request to a subcommittee to continue negotiations with CPS.
Meanwhile, a bill aimed at easing pension pressures at CPS, while also giving Governor Bruce Rauner the local property tax freeze he wants, cleared an Illinois Senate committee on Wednesday.