Pension woes backdrop to Chicago teachers’ strike

Here’s an excerpt from Steve Malanga’s Manhattan Institute look at what can only be called theft. The teachers were over-promised over-priced pensions taxpayers cannot afford and should never pay:

Chicago Teachers Union representatives said yesterday that the strike they authorized is not principally about money, but about issues like teacher evaluations (though the negotiations have gotten stuck over financial issues like the cost of health care). However, the backdrop to this strike is the long-term financial plight of the Chicago school systems, exacerbated by the soaring costs of pensions in the budget.

That budget is in such bad shape that in July the Civic Federation of Chicago, a good government group, opposed the new school budget for the first time in 5 years because the budget is structurally out of balance, meaning it uses gimmicks to make the numbers work and is unsustainable over the long term.

As the Civic Federation notes, the school system balanced this year’s budget by not making its full annual required pension contribution even though the pension system is seriously underfunded, and by using all of its reserves to close a $665 million budget deficit. As the chart above shows, the school system’s pension costs were soaring until the state legislature stepped in and lowered its mandated pension contributions for three years. This is what’s called ‘pension relief’ in Illinois, where in lieu of real reform legislators simply pay less into a system whose debt is growing.

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