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Chicago mayor demands Illinois teacher pension reform

Chicago Mayor and former Obama administration official Rahm Emanuel addresses the first session of the Democratic National Convention in Cha
Chicago Mayor and former Obama administration official Rahm Emanuel addresses the first session of the Democratic National Convention in Cha

CHICAGO (Reuters) - Chicago Mayor Rahm Emanuel, fresh from a bruising 7-day strike by Chicago teachers, said on Thursday the state-wide retirement system for teachers in Illinois must be reformed to be fair and sustainable.

With Chicago and its public school system facing ballooning pension payments, the Democratic mayor said it was unfair that the state was picking up most of the retirement costs for teachers outside Chicago, which funds teacher pensions largely on its own.

"No municipality outside of Chicago pays for their teachers pensions," Emanuel said at a breakfast meeting with reporters that was hosted by Bloomberg. "Our taxpayers get the dubious honor of getting double hit."

The Teachers' Retirement System (TRS), which covers educators in hundreds of Illinois school districts, gets 93.3 percent of its funding from Illinois, according to state documents.

The fund, the largest of the five state pension funds, accounts for the largest single share of Illinois' $83 billion unfunded pension liability.

The funding of TRS has become a political lightning rod this year. Governor Pat Quinn and House Speaker Mike Madigan, both Democrats, support a move to shift the state's TRS contributions back to local school districts. Republicans, who fear that would lead to local property tax increases, have protested, as have some Democratic lawmakers outside Chicago.

The two sides were deadlocked on the issue when the regular legislative session ended in May, and the funding shift was not addressed during a special session on pensions in August. Lawmakers are wary of making the change before November's general election.

"I have confidence we're going to deal with it in January because we have to deal with this," Emanuel said, adding that he and other Illinois mayors would lay out a pension reform proposal in early January.

In his fiscal 2013 budget address on Wednesday, Emanuel warned the Chicago City Council that the city's pension payments would consume $1.2 billion or 22 percent of the budget in less than four years, leaving the city with dwindling cash to fund essential services.

The pension payment for the Chicago Public Schools is projected to nearly triple next year to $534 million.

Emanuel said he needed state legislative approval for his plans to suspend cost-of-living increases for retirees, phase in higher worker pension contributions and raise the retirement age. He said city labor unions should agree with those changes.

"I think the best thing I could do is give them certainty there will be a pension payment for them when they retire," Emanuel said. "Right now they are paying into a system that can't say that, and I think that's grossly unfair to them."

(Reporting by Karen Pierog; Editing by Peter Bohan)

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