Another year, another Chicago Public Schools budget crisis.
As the city gravitates away from mayoral control of the schools in favor next year of its first fully elected school board, the current board with a majority appointed by Mayor Brandon Johnson, a former Chicago Teachers Union organizer, has passed an unbalanced budget and demanded that Springfield lawmakers this coming November provide the $150 million needed to keep CPS from laying off workers and furloughing teachers in the school year that’s about to start.
We’ve condemned this stunningly irresponsible action and doubt any such rescue is forthcoming in the fall veto session. So it’s likely too late to avoid a CPS train wreck this school year.
But two things can be true at once. The school board’s radical idiocy does not negate the state’s obligation to think about the longer haul — specifically, the structurally unbalanced budgets facing Chicago Public Schools as far as the eye can see.
No, we’re definitely not advocating for a series of CPS-specific cash bailouts, especially not as a reward to a profligate board that is acting more like a group of petulant political radicals than a responsible and pragmatic governing body.
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We think the route to helping put CPS on solid financial ground is through merging the Chicago Teachers Pension Fund with the state-run Teachers Retirement System, or TRS.
This isn’t a new idea. Former CPS CEO Paul Vallas argued in our pages last month that the state should fund the CTPF (which it currently funds at around a third of the need) at the same level as the TRS (which it funds at 98%), a smart idea but one that would keep all the administrative costs of running two separate retirement systems and does not achieve the potential economies of scale when it comes to investment returns. It also leaves the CTPF vulnerable to the political machinations of the the teachers union when to comes to investment choices.
There’s also been talk on and off for decades about making the state of Illinois responsible for all teacher retirement plans, as is the practice in most other states. Chicago’s school system management of its teachers’ pensions is a historic artifact; the CTPF was created in 1895, and TRS was launched 35 years after that. For many years, Chicago teachers had no interest in merging the funds because TRS wasn’t nearly as healthy as Chicago’s. That’s hard to believe, but it’s true.
Now, the two pension systems are roughly on a par in terms of their funded status. Chicago’s fund held 48.1% of assets needed to meet current and future obligations as of mid-2024; TRS was at 45.8%. Neither figure is good, but there are worse. The city of Chicago’s pension funds are hovering around 25%.
The core of this issue is that, unlike any other school district in the state, CPS must fund its teacher pensions and the enormous cost is a big part of the reason the district regularly faces deep deficits; the shortfall for the 2026-27 school year is $732 million.
CPS is pumping a little over $1 billion into the teacher pensions in the upcoming year. The state will cover about $368 million of that. A dedicated property tax levy the state allows CPS to charge taxpayers just for teacher pensions will contribute another $647 million. In past years, the district has had to pluck tens of millions from operations to cover what the property tax levy has not. This year, that won’t be necessary,
Taxpayers in no other part of Illinois have to pay anything beyond the nominal for their teachers’ retirement. Their property taxes simply cover the cost of educating their kids.
The arrangement is fundamentally unfair, and it should be changed.
Doing so would require state legislation, since the special property tax levy for teacher pensions can’t be diverted to CPS operations without a change in law. And, of course, it would cost state taxpayers hundreds of millions, no small matter.
There certainly would be room for compromise that could soften the blow for the state. For example, part of the exorbitant cost of Chicago teachers’ pensions comes from a long-ago deal between the city and CTU in which teachers hired before 2017 have to contribute only 2% of their salaries to their retirements, leaving CPS to pick up the remaining 7%. More junior teachers contribute 9%.
The cost of the so-called pension pickup was $135 million in 2025, according to the Civic Federation. It would be only fair for Chicago taxpayers to continue to absorb the cost of that special deal rather than foist it on state taxpayers.
Another potential benefit of lifting CPS’ teacher pension burden would be to enable CPS to at long last pay a portion of the employer contribution to Chicago’s Municipal Employees’ Annuity & Benefit Fund, which covers some city workers but also applies to employees of sister agencies, including many non-teacher employees at CPS. CPS agreed to provide $175 million to that fund during the Mayor Lori Lightfoot years, when the schools were swimming in federal pandemic cash.
Readers might recall that Mayor Johnson attempted to force junk-rated CPS to recklessly borrow to continue to making the MEABF payment, and the resistance to doing so by CPS’ then-CEO Pedro Martinez was a large part of why school board members aligned with the mayor fired him last year. No such demands this year from the mayor, as even he appears to realize CPS is too broke to help with MEABF.
But that issue should be on the table if the state pays for Chicago teacher pensions. It could well be incorporated into state legislation to combine the Chicago teachers fund with TRS, since state law currently makes the city of Chicago entirely responsible for MEABF even though more than half the fund’s beneficiaries are CPS employees or retirees.
In other words, there’s a grand bargain to be had here with a little bit of leadership and goodwill on all sides.
We’ll emphasize here that a deal along the lines we’ve outlined wouldn’t solve the entirety of CPS’ structural imbalance. There still would need to be consolidation of some of the dozens of dramatically under-enrolled schools to truly put the district on solid financial footing, as we’ve said more than once.
But CPS’ hole is so deep that there’s no way to solve its problems solely through school closures anyway. Some help from the state always was going to have to be part of the solution for the nation’s fourth-largest public school system.
Attacking the pension issue head-on is to our minds the best way for the state to get involved in a CPS fix.
Would such an effort be criticized in other parts of the state as a CPS bailout? No doubt. But no one can argue that it’s right for CPS to shoulder such an onerous burden while the state pays the tab for every other school district.
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