A number of public sector workers and retirees in Chicago have officially joined a unified front to protect their retirement security from being diminished as part of citywide pension reform. Progress Illinois takes a closer look at the new We Are One Chicago coalition.
A number of public sector workers and retirees in Chicago have officially joined a unified front to protect their retirement security from being diminished as part of citywide pension reform.
A group of city unions have formed the 'We Are One Chicago' coalition to push back against possible cuts to the "modest life savings" of workers and retirees.
At a news conference Monday, Chicago firefighters, police officers, teachers and other municipal workers and retirees stressed that they have paid their fair share -- 8.5 percent to 9 percent -- into the city's pension funds each pay period and don't want to see their benefits reduced as a result of politicians failing to do their part.
"We work hard for our money. We paid our 9 percent faithfully," said Patricia Boughton, a Chicago Public Schools (CPS) teacher of more than 20 years. "We earned this money, and we should not be penalized because the politicians in this city refused to live up to their obligations to the pensioners. I feel like we've been robbed, like someone's stealing from us."
All five city pension systems, which together face an estimated $20 billion shortfall, have been "deliberately underfunded" by politicians through inadequate employer contributions, the coalition members stressed. Due to "unwise underfunding," the Chicago Teachers' Pension Fund, for example, went from being 100 percent funded in 2001 to just 54 percent funded in 2012, according to the coalition.
Currently, Chicago's pension debt for its public workers is pegged at $18,596 for every man, woman and child in the Windy City.
Louise Bates-Spencer, who worked in the city's Department of Public Health and retired in 1998, said she received a total pension payment of less than $18,000 last year. Her monthly benefits this year have been reduced as a result of Chicago Mayor Rahm Emanuel's decision to phaseout the 55 percent health care subsidy for 30,000 retired city workers and their dependents over a three-year period starting in January.
"It is extremely difficult on the little I get now," Bates-Spencer said. "To take a pay cut year after year -- it's unfathomable. To all the politicians hollering about our pensions I say to them, 'Let's get real.' The public needs to be told the truth. The politicians didn't pay their fair share while we earned our pension. We worked for it. We paid for it, and it is our livelihood. Now, it's like throwing the seniors to the wolves. All the cuts they want to levee are against seniors."
Absent any Chicago pension reform in Springfield, the city will have to make a $600 million contribution in 2015 to its underfunded police and firefighter pension funds, which will bring the city's total pension obligation to $1 billion.
Additionally, CPS must make a $613 million payment to the pension fund for Chicago teachers by June 30. That amount is $417 million more than the public school district's annual pension payment last year.
While discussing the Chicago Teachers' Pension Fund earlier this month, Illinois Senate President John Cullerton (D-Chicago) said there could be “thousands and thousands” of layoffs if teacher benefits are not reduced in some fashion.
Cullerton did not specifically say what he would like to see in a bill to address the city's pension crisis. He did say, however, that the controversial statewide pension reform overhaul approved in December, SB 1, could be a starting point for discussions. The state-level measure, projected to save $160 billion over 30 years, is currently facing a legal challenge from the We Are One Illinois coalition of labor unions based on its constitutionality.
Meanwhile, Emanuel has been pressing the Illinois General Assembly to tackle municipal pension reform.
"The pension crisis is not truly solved until relief is brought to Chicago and all of the other local governments across our state that are standing on the brink of a fiscal cliff because of our pension liabilities," Emanuel said in a statement after SB 1 was approved. "Without providing the same relief to local governments, we know that taxpayers, employees, and the future of our state and local economies will remain at risk."
Jesse Sharkey, vice president of the Chicago Teachers Union (CTU), said We Are One Chicago leaders are open and willing to talk about pension reform with elected officials.
But there has to be a discussion about tax fairness and new revenue, such as closing tax loopholes at the state level and taxing luxury services in the city, Sharkey stressed. He explained that SB 1 included no new "meaningful" revenue reforms, and that is "not a starting point we're willing to accept."
"Having a discussion about what happens to the pensions, what happens to retirement security, is contingent on also having a conversation about there being a commitment to having revenue, and obviously we're willing to talk with the elected officials, but we're not willing to just be the butt of their attacks," he added.
According to a pension-related report CTU also issued Monday, teachers could see an average pension cut of about $700 per month if a bill similar to SB 1 is applied to the Chicago Teachers' Pension Fund. Overall, the proposed pension changes for city of Chicago retirees could also mean a $270 million total cut from retirement income over five years, according to the report.
"Such cuts alone would be problematic, but cuts to retirement security ripple through the wider economy," the report reads.
Chicago's African-American middle class will feel the biggest impact as a result of reduced retirement benefits, the report argued. That is because retirees living in the city’s majority-black zip codes earn over $600 million in annual pension incomes from the four public funds, the report found.
When coalition members were asked who they have talked to thus far about pensions, Tim O'Brien, spokesman for the Chicago Firefighters Union Local 2, said his union and the Associated Fire Fighters of Illinois have worked together on the issue with the mayor's administration since Emanuel took office.
"(The unions) have brought negotiations in," O'Brien said. "They have been willing to negotiate. (Emanuel) has not accepted any type of answers."
The We Are One Chicago coalition includes members of AFSCME Council 31, CTU, the Chicago Federation of Labor, the Fraternal Order of Police Chicago Lodge 7, the Chicago Firefighters Union Local 2, the Chicago Police Lieutenants’ Association, the Chicago Police Sergeants’ Association, the Illinois Nurses Association and SEIU* Local 73.
Coalition members are set to gather Wednesday in Springfield for a rally at the state Capitol to promote their grassroots campaign.
According to a release from the coalition, the campaign will highlight:
Anchors of Our Communities: City employees and retirees live in, serve, and anchor neighborhoods throughout Chicago. They make enormous contribution's to our city's economy, vibrancy, and safety. They constitute Chicago's working and retired middle-class families. Residents rely on them in every community to educate our children, care for our most ill, and protect our lives and property.No Social Security: Unlike private-sector workers, City of Chicago employees and retirees do not receive Social Security. Pensions are their life-savings -- their only sure foundation for retirement security. Wall Street billionaires and big banks crashed the economy -- and pension funds -- in causing the Great Recession, and now politicians want to cut the pensions earned and paid for by our city's workforce.Politicians and Wall Street Caused the Pension Debt: For decades, politicians shorted and skipped their share of Chicago's pension payments, manufacturing today's pension debt. All that time, the city's public employees faithfully paid their fair share -- 8.5 precent, 9 percent, or more -- of every paycheck. It's wrong to punish public servants for the actions of irresponsible politicians and the big Wall Street bankers and CEOs who fueled the Great Recession.Revenue Must Be Part of the Solution: The fiscal problems Chicago faces cannot be solved solely by slashing modest pensions. It will take a serious commitment of new revenue.
*The SEIU Illinois Council sponsors this website.