Chicago school board to vote on pension payment
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The Chicago Public School board is expected to decide today whether the city or CPS shoulders $175 million in nonteacher pension payments traditionally paid by the city.
Why it matters: If the city of Chicago (which already fronted the money) is not reimbursed by CPS, it would fall into a deficit, possibly triggering another credit downgrade and raising the cost of future borrowing.
- But if CPS pays it, CEO Pedro Martinez argues it would leave no money to cover the expected costs of the still unresolved teacher and principal labor contracts.
Between the lines: Martinez was fired, in part, for his refusal to foot the bill. Now the decision falls on the city's first partially elected board whose varied stances make the outcome of the vote hard to predict.
- Martinez's contract lets him stay in the job six months after his dismissal, which means until June.
Context: The city covered this pension payment for decades as mandated by state law until former Mayor Lori Lightfoot suggested in 2021 it was time to shift the burden to CPS, a move that Mayor Brandon Johnson, at the time, opposed.
- Today Johnson supports the shift, citing increasing CPS independence as it transitions to a fully elected (rather than mayor-appointed) board in two years.
What they're saying: "This board is going to be an independent body," Johnson said at a press conference on Tuesday.
- He added, "I don't want to sound like my dad, but at some point, they're gonna have to move out. That's what this is. It's a relationship that we have to disentangle."
The options: On Tuesday, the CPS board received a memo from a financial firm laying out ideas for making the payment, which includes refinancing its debt.
- Other options in the memo include finding the money through staff cuts and more tax increment financing from the city.
- CPS did not respond to Axios questions about how it would respond to the memo.
The latest: Wednesday afternoon Johnson said he'd convened a CPS - CTU summit that was "so close" to a labor contract deal that he asked leaders to keep talking all night.
What we're watching: How board members, who are still more than half appointed by the mayor, vote on the pension issue this afternoon.