The Chicago Employment Law Blog

CTU, CPS, Head to Court Over Closed Pension 'Loophole'

Something miraculous happened in Illinois this year. A bipartisan effort to cut spending and close a pension loophole passed! Members of opposing political parties worked together to cut spending and address the pension crisis that threatens to cripple the budgets of CPS, Chicago, and even the state itself.

The loophole-closing law addressed the issue of double-dipping and six-figure pensions that were awarded to CPS workers that took leave from the district in order to work for the Chicago Teachers' Union. The law affected both union leaders and lower-level union employees, reports the Chicago Tribune.

Prior to the change, union leaders would continue to receive credit towards their public pension, while also receiving union contributions that would raise their pension to the level of their present salary. Current CTU President Karen Lewis is making about $148,000. Former President Marilyn Stewart survives on a $150,000 pension. Both are unaffected by the change, but future presidents would have to rely on the union alone for retirement perks.

Meanwhile, the ordinary folks would take leave from the district, sometimes up to two decades' worth, and still receive a CPS pension. The union would provide a second pension. This double-dipping was prohibited by the law, but was apparently either unclear or unenforced. The new law strips away the existing double-dippers' second pension.

Progress is never easy, however. The CTU and other unions have sued to block the law, claiming it unconstitutionally takes away retirement benefits. Illinois' state constitution prohibits retroactively diminishing pensions.

Proponents of the new law argue that they aren't taking away anything that the employees were entitled to - the union's double-dipping allowance was a misinterpretation of the existing law. The new law merely clarifies the previous law. They are also not touching the union leaders' existing pensions, as those were not prohibited by the previous statute.

Reforms, while painful for some, are absolutely necessary. CPS has an existing $1 billion deficit. An additional $540 million in pension payments begin next year. The last annual report determined that the teachers' pension plan had only 60 percent of its existing obligations funded.

The city and state have their own pension shortfalls, so there will almost certainly be no bailout. The state's pension shortfalls are expected to hit $93 billion next year, reports the Tribune.

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