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Chicago Public Schools Warns 1,400 Layoffs May Follow $634M Pension Payout

By Ted Cox | July 1, 2015 8:17am | Updated on July 1, 2015 4:05pm
 Mayor Rahm Emanuel and CPS CEO Jesse Ruiz say they're trying to spare teachers from 1,400 in needed layoffs.
Mayor Rahm Emanuel and CPS CEO Jesse Ruiz say they're trying to spare teachers from 1,400 in needed layoffs.
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DNAinfo/Ted Cox

CHICAGO — Chicago Public Schools managed to make a required $634 million payout to its teacher pension fund hours before the midnight Tuesday deadline, but the mayor said Wednesday it would bring on cuts that were "intolerable, unacceptable and totally unconscionable."

Acting CPS Chief Executive Officer Jesse Ruiz estimated that a fresh $200 million in cuts would cost some 1,400 layoffs, but insisted, "Very few of those are teachers."

"Class size will not go up," promised Mayor Rahm Emanuel.

Instead, Ruiz and Emanuel added, most layoffs would concern CPS Central Office employees and special education, with funding also cut for elementary-school sports and school repairs.

 CTU Vice President Jesse Sharkey said teachers want no part of a 7 percent cut in pay by contributing more to their own pensions.
CTU Vice President Jesse Sharkey said teachers want no part of a 7 percent cut in pay by contributing more to their own pensions.
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DNAinfo/Ted Cox

High schools will also start and finish 45 minutes later, in another cost-cutting measure.

"It is gonna change the way schools themselves operate," Emanuel allowed.

Ruiz acknowledged, "The classroom will be affected."

Ruiz added Wednesday that CPS was also asking the Chicago Teachers Pension Fund to loan back $500 million of Tuesday's contribution, in order to ease a budget deficit of more than $1 billion this year and help set up next year's required pension payment.

The Chicago Teachers Union said it was "blindsided" and "outraged" by the layoff threat — despite meeting with CPS Tuesday.

"We don’t buy that," CTU spokeswoman Stephanie Gadlin said Wednesday about teachers being protected from layoffs. "We’re hearing mixed messages."

Ted Cox discusses what's next for CPS and the teachers union:

While acknowledging that it was "too early to tell" the effect of the cuts on teachers, CTU Vice President Jesse Sharkey issued a blistering response Wednesday. He said the cuts would do "real damage to our schools," and he called CPS' claim that special ed is overfunded "laughable."

Sharkey granted that there are 300-350 open positions for special-ed teachers, slated to be left unfilled in the layoffs, but said that was because CPS had so much trouble hiring teachers qualified in that demanding specialty.

Sharkey lashed out at "gimmick budgets" based on "smoke and mirrors," and called claims of $740 million in cuts over four years at the CPS Central Offices "specious" and the product of "funny math."

Sharkey said CTU membership would reject a call for teachers to pay more of their pension contribution, saying it amounted to a 7 percent pay cut, which teachers would find "unacceptable." Without mentioning a strike as CTU attempts to negotiate a one-year extension on a contract that also expired Tuesday night, he called that "a fighting position, and our union wouldn't back down from that."

Emanuel blamed the General Assembly for cuts he described as "intolerable, unacceptable and totally unconscionable." He offered two long-term proposals: to either roll all state teacher pensions into one fund, instead of Chicago paying its teacher pensions independently, or to dramatically alter the way the state funds education across the board.

An unusually animated Emanuel, speaking with a rare urgency, told state legislators: "Get off your duff."

Sharkey, however, blamed Emanuel and "the handpicked board that the mayor appointed" for CPS' fiscal woes. He awaited more details on the $500 million loan CPS has sought from the teacher pension fund and took no position on it for now.

Much of Tuesday's pension payment was paid with borrowed money, adding to the district's projected $1.1 billion deficit.

"Springfield has failed to address Chicago Public Schools' financial crisis, so today, CPS made its 2015 pension payment by borrowing money," Ruiz said Tuesday in a statement.

"As an immediate consequence of driving the district further into debt and our need to address the existing structural deficit — which is also driven by decades of pension neglect — CPS will make $200 million in cuts.

"As we have said, CPS could not make the payment and keep cuts away from the classroom, so while school will start on time, our classrooms will be impacted," Ruiz added.

 CTU President Karen Lewis said she was
CTU President Karen Lewis said she was "blindisded" and "outraged" by CPS' threat to cut 1,400 positions.
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DNAinfo/Ted Cox

If the city had failed to make the pension payment, it could have faced a lawsuit from retired teachers.

In a statement, CTU President Karen Lewis said her members are outraged.

“We are blindsided by reports that the district intends to lay off 1,400 public school educators, given that we just met with them yesterday and there was no mention of this action. These layoffs prove that the board never intended to make the pension payment in good faith and that they are using this to justify more attacks on our classrooms,” Lewis said.

“Putting 1,400 people out of work is no way to balance a budget and resource our schools. This is going to hurt our students and the most vulnerable children in our district. These cuts are a result of a history of poor fiscal management by the Board of Education. Mayor Rahm Emanuel’s handpicked board has led this district over a financial cliff.

“We are outraged at this deceptive action that only furthers the distrust teachers, parents and students have of the board. We thought it suspect at the time that the board was pressuring us to sign off on an agreement yesterday, before we had a complete agreement. This is retaliatory and unnecessary because the mayor refuses to seek revenue options to stabilize CPS.”

CTU released a "budget brief" Wednesday repeating calls that the district is "broke on purpose" and dismissing claims CPS has trimmed $740 million in administrative costs. It pointed to "reckless outsourcing" in a $260 million custodial contract with Aramark that the union says is already over budget, and called for the Board of Education to "balance its budget by reprioritizing services to students."

Ruiz took charge of CPS in April after former CEO Barbara Byrd-Bennett took a leave of absence amid a federal probe into a no-bid contract she backed during her tenure. She later resigned.

At that time, Chief Financial Officer Ginger Ostro reported that the district faced a $1.1 billion deficit in the 2016 budget for the fiscal year beginning in July. Ostro said $700 million of that was from overdue pension payments required by state law.

"We can't hope to cut our way out of this gap," Ostro said in April, calling for pension reform from the Illinois State Legislature and for additional state funding.

Michael Brunson of the teachers union called talk of pension reform during Byrd-Bennett's departure the "annual dance of the deficit" and said balancing the budget was simply "a matter of priorities."

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