CPS’ lawsuit shines light on its own bad fiscal practices

There are a lot of uniquely bad budgetary practices in Illinois that if ceased now, could save taxpayers millions.

This is important to remember not only in the context of budget negotiations, but also when judging different groups’ complaints about the budget impasse. If nothing else positive, the impasse has brought certain bad practice to light.

This could not be more evident than with a lawsuit this week coming from Chicago Public Schools, or CPS. CPS is suing Gov. Bruce Rauner and the Illinois State Board of Education, accusing the state of employing “separate and unequal systems of funding for public education in Illinois.”

The lawsuit asks that the state be found in violation of the Illinois Civil Rights Act for maintaining what CPS calls “separate and unequal” systems for funding school districts and pension obligations. The lawsuit points out that most CPS students are minorities and poor, while public school students in the rest of the state are “predominantly white.”

CPS could be right that there is some sort of discriminatory element to the district – but more so in the fact that poor and minority students are sentenced to terrible schools by their zip code. And that CPS has blocked charter school expansion in the city at the Chicago Teachers Union’s wishes.

But what CPS is not right about is the reasons for fiscal crisis. The district’s financial problem is not due to a lack of money. The district spends an exorbitant amount of money, including on some of the highest paid teachers and administrators throughout the country. Beyond that, the district – like many others across the state – engages in the irresponsible practice of pension pickups.

Since 1981, when it was negotiated as part of a collective bargaining agreement, CPS has been picking up part of teachers’ pension payments each year, meaning the district (and by extension, taxpayers) has been paying 7 percent of the teachers’ 9 percent payment. This practice has cost the district $1.2 billion alone in the last decade.

It’s unsustainable, reckless practice that pushes money out of classrooms.

Pension pickups are just one part of the burden teachers’ pensions impose on taxpayers. Teachers’ Retirement System, or TRS, does the pension system for teachers outside of CPS, does the same thing and has admitted it can’t meet the lofty investment return targets it previously had set for itself, leaving taxpayers with the tab for the shortfall. And TRS’ mismanagement mirrors CPS. TRS’ pension pickups cost taxpayers $134 million in fiscal year 2015 alone.

TRS’s investment return failures combined with pension pickups mean taxpayers are getting hit by pension costs on three sides. First, taxpayers pay the state’s employer pension contribution through income taxes. Second, many pick up their teachers’ required contributions through local property taxes. And finally, taxpayers have been solely responsible for bailing out the billions in pension fund failures.

Now, at the crux of CPS’ lawsuit, is the district asking for more funding, which would be at the expense of taxpayers throughout the state. Downstate taxpayers – who are already paying for their own districts – would have to bail out a failing district in CPS.

As we examine budgetary priorities during the state’s budget impasse, complaints like that in CPS’ lawsuit should be met with heavy skepticism. The district has been mismanaged and is failing financially, as well as in the classroom. The district needs significant fiscal and educational reforms before asking for a bailout from Illinois taxpayers.