Kicking teachers in the teeth. More on the pension pick-up at CPS.



Let me help some of our colleagues understand what really happened here. This is just another example of how no good deed goes unpunished. The benefit payment helped the school board, not the teachers.

Whether compensation was paid in dollars to the teachers or dollars to the pension fund didn’t seem to matter at the time. (We know better now.) Total money in paid compensation didn’t change at all. Other public employees should be thankful they never accepted a similar arrangement that their employers could later turn against them.

There was less than adequate money available to the school board from the state to fund schools. Instead of increasing funds to schools, the General Assembly changed a law so school boards could reduce tax withholding payments to the state and federal government by compensating employees with a non taxable benefit ( in this case a pension “pick up”) INSTEAD of higher pay. That money would then be available to spend on other things.

Teachers agreed to this arrangement to help the board. Now the board wants to use that agreement to lower teacher compensation. How nice! They only want to count what they supposedly “gave” teachers, not what teachers gave up. They really didn’t give teachers anything. Where compensation was paid was changed. Compensation was NOT increased.

Someone was running a scam when pension pickups began in the 1980’s. but it wasn’t teachers. It was the General Assembly and C.P.S. How total compensation is paid has a great effect upon how much tax withholding C.P.S. has to pay the state and federal government. The law you mentioned was passed to reduce that amount, allowing money to be spent elsewhere by school boards. It didn’t increase compensation given to teachers at all.

Now C.P.S. says that teachers compensation should be reduced by that amount? Nothing like using the willingness of teachers to try to help against them. I’d strike too. Nothing like kicking teachers in the teeth because they agreed to try to help solve a cash flow problem.

– Hugh

3 Replies to “Kicking teachers in the teeth. More on the pension pick-up at CPS.”

  1. The problem isn’t the pension pick up back in the 80’s. That’s ok. The board is not ahead on this if they pay over the $ to the plan. The teachers are the same either way except for taxes. With less withholding for pension income tax withholding goes up so take home pay may be a little less.
    the problem with all this is that $ wasn’t paid over when it should have been. That’s how the board came out ahead, but only in the short term, they pay out less in salary, and don’t pay the pension.

    Classic political maneuver, kick the can..

    1. I would respectfully disagree. CPS actions were, and are both unethical and dishonest.

      Tax withholding is not something CPS would ever pay the pension fund. It is sent to the Feds and the state out of each employee’s paycheck to cover employee tax liabilities.

      Part of that employee withholding no longer has to be paid if CPS claims to be making the pension payment instead of the employee. So the money goes to the benefit instead of a raise. Taxes that would have been owed go away. Less is withheld paychecks for taxes and CPS gets to keep that difference in withholding. The Feds and state lose the taxable income that would have been paid to teachers in increased salary.

      CPS gains ((7% of teacher payroll x .185 combined effective tax rates) x 30 or so years). It comes to millions of dollars CPS has kept over the years. Tax savings to teachers was minimal.

      Now CPS wants more to fill the budget hole. CPS wants teachers to begin paying that 7% again with no increase in income. So CPS gets to pick up an additional 7% of payroll by resuming teacher payroll deductions of the full 9% of income.

      CPS then makes the payment out of teacher payroll rather than “CPS money”. Instead of saving 18.5% of the 7 % cost, now they get the whole 7% of payroll. Cute. More millions for the board.

      Did you ever wonder how CPS could cut one third of their personnel and still operate (while claiming each year to have cut central office operations “to the bone” year after year)? I know I do.

      You are correct that if in addition, they made no payments to the pension fund at all, they gained that money too. Available money to spend is increased by forcing teachers to pay twice. (Reduced salary because of the past agreement and increased payroll deduction now.) Paying out less money in the first place improves cash flow.

  2. Hugh,
    Thank you for your ability to make sense of the scam CPS is trying to perpetrate again. So many people hear one side of this issue and are ready to call us greedy.

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