I am in Chicago to speak on a panel about the city’s pension crisis. Meanwhile, Chicago schools are closed today for the second teacher strike in the last four years.
These two events are related. In fact, the numbers behind Chicago’s teacher pension system are staggeringly, mind-blowingly awful. Here are a few highlights (or lowlights, depending on your perspective):
• 2 cents: The amount teachers contribute into the pension plan for every $1 they earn in salary.
• 7 cents: Called a pension “pick-up,” the city of Chicago pays 7 cents of each teacher’s so-called “employee” contribution (a total of 9 percent). The city and the union agreed to this deal in the 1980s and it has been common practice ever since.
• 32 cents: The additional amount Chicago is paying into the teacher pension fund for every $1 they pay in salaries. (Most of this is for debt.)
• $53 million: The amount Chicago contributed to the pension fund in 2006.
• $328 million: The amount Chicago’s actuaries said it was supposed to contribute in 2006.
• $635 million: The amount Chicago contributed to the pension fund in 2015.
• $750 million: The amount Chicago’s actuaries said it was supposed to contribute in 2015.
• $127 million: The amount of money the district spent on the pension pick-up last year. Chicago Public Schools is now bargaining to end the pick-up, a proposal that’s at the heart of the current strike (it would mean an immediate 7 percent cut in every teacher’s take-home pay).
• 2059: The year in which Chicago hopes its pension fund will reach 90 percent funded (Note: the city does not currently expect to reach 100 percent funding ever). To even meet the 2059 goal, the city must annually contribute the full amount the actuaries say it needs (which the city has not done in recent years). The city must also be perfectly accurate in all of its assumptions, including earning annual investment returns of 7.75 percent.
If these numbers aren’t depressing enough, here’s one last number:
• 21 years: The length of time a new, 25-year-old Chicago teacher must remain teaching before her pension will finally be worth more than her own contributions. The vast majority of teachers will leave before then. Chicago teachers are in a different pension plan than other Illinois teachers, but these numbers are comparable to the state system.
As is true for the state as a whole, Chicago is spending a lot of money to preserve a pension plan that isn’t serving its teachers very well.
This post originally appeared on TeacherPensions.org.