Mayor Brandon Johnson’s administration is instructing the school board to move ahead on accepting the costs of a $175 million pension payment that has been a political hot potato between City Hall and Chicago Public Schools.
Bridget Early, Johnson’s deputy mayor for labor relations, emailed several top education officials a presentation dated Feb. 13 that outlines the next steps the school board can take to make the controversial payment that is currently paid by the city. Solutions include borrowing and shifting responsibility to the state, which pays for all other school districts’ pension costs.
Johnson officials Khari Humphries, deputy of education and youth, Jill Jaworski, chief financial officer, and Macquline King, senior director of educational policy K-16, were sent the presentation. Several board members told the Tribune they received the presentation from city officials in an email sent Tuesday.
CPS officials did not immediately respond to a request for comment. In a statement Wednesday morning, Johnson’s spokesperson Cassio Mendoza said the city was providing “education … to inform Board of Education members as part of their ongoing orientation.”
“The City outlined the role of TIF in CPS financing and offered potential illustrative borrowing scenarios of TIF-backed bonds to help Board members understand that tool,” Mendoza wrote, referring to the tax-increment financing districts that the slides suggest could pay for future loans. “As CPS transitions to an elected school board, the City continues to work with the Board of Education to disentangle finances, including the MEABF payment.”
The push from Johnson’s team comes at a pivotal time for CPS as the district faces difficult financial and political challenges. With at least $500 million in debt projected in the next few years and a new teachers contract still being settled, the pension payment has been framed as a choice between retaining CPS employees or paying pension costs for CPS employees.
The city is asking for CPS to amend its 2025 budget and make the Municipal Employees’ Annuity and Benefit Fund of Chicago payment by March 30, according to the presentation. To do so, the hybrid school board would need to pass an intergovernmental agreement per state law and amend its current budget before that date. Budget hearings have been scheduled for mid-March, according to several sources close to the board.
It is unclear why the Johnson administration is making the push now. His team’s slides say the payment must be made by March 30, though they do not elaborate on the reasoning.
The current, hybrid school board has 21 members, 11 of which were appointed by Johnson himself. The other 10 were elected in the city’s first school board races last November, with four being CTU-backed and six independent or funded by charter school interests. That gives Johnson a comfortable majority until at least 2027, when the fully elected school board will be seated.
However, a budget amendment will require two-thirds approval from the school board.
The current CPS budget for this year that passed last July did not include costs for the upcoming Chicago Teachers Union contract or the $175 million pension payment, a decision that ultimately led to Johnson’s first handpicked school board resigning en masse and, eventually, the dramatic firing of CPS CEO Pedro Martinez. Johnson’s team had initially proposed a high-interest loan that summer to cover the MEABF payment as well as the CTU contract but could not get Martinez or the school board — which has the sole authority to fire him — in agreement.
The pension obligation is for non-teaching personnel at CPS and has been the subject of years of dispute between the city and school district over which body should be responsible for the payment. Then-Mayor Lori Lightfoot began shifting the obligation back onto CPS starting in 2020, a move Johnson opposed but began fighting to preserve last year as the city faced heavy budget deficits.
In the slides, a section for “Illustrative Borrowing Scenarios” suggests that Johnson still intends for the school district to take on debt to cover future costs. The presentation assumes $375 million in “increased budgetary expenses for CPS” and $139 million in “unbudgeted TIF surplus revenues,” though it does not elaborate on how it arrived at those totals.
One scenario would entail issuing $242 million in bonds and repaying that plus 4.37% interest in five years, or until 2031. The other would issue the same amount in bonds but take 10 years to pay back, with 4.6% in interest. The school district would be slated to pay off that bond by 2036.
In both, Johnson’s team assumes “available revenues steadily increase and projected available revenues are more than sufficient to cover the annual debt service payments.”
The proposals could be another political liability for Johnson and the CTU, however. The loan floated by the Johnson administration last summer was a lightning rod of criticism during the November school board races, in which the CTU only won three contested seats.
Johnson’s team also notes in the slides that the “City provides support to CPS in the form of pension payments for CPS employees, capital projects, grants and other funding,” on top of $298 million this year from declaring a tax-increment financing surplus, excess money in taxing districts around the city that is used to fund economic development projects.
Early last year, the mayor passed a $1.25 billion affordable housing bond that hinges on letting a bundle of controversial tax increment financing districts, or TIFs, begin to expire across the city. When these TIF districts sunset, other bodies such as CPS will also be able to tap into millions of dollars of potential revenues.
All of these fiscal and political considerations have unfolded under the backdrop of stalled CTU negotiations that began last April. Though there has been progress at the negotiating table between CPS and CTU on financial sticking points like raises, the final cost of the teachers contract is still up in the air. CTU recently rejected an independent arbitrator’s recommendations for settling the contract, asking for additional staffing increases and some non-financial sticking points.
According to district officials, CPS only has about $140 million to boost the total cost of the next CTU contract — and that’s without accounting for the costs of the MEABF payment.
The city presentation argues that CPS has a unique governing and financing structure that results in less support from the state and makes Chicago the only municipality in Illinois that must fund its own pension costs. That follows Johnson’s point that having the district cover the payment would strengthen the argument that CPS must be treated the same as other school districts whose pension contributions are made by the state.
“State leadership has relied on City governance of CPS as a reason to make exceptions that result in less funding for CPS,” the slides say. “Disentangling CPS from the City allows CPS to be treated fairly by the State and receive pension funding like all other school districts.”
Facing budget crushes in both the city and CPS budgets, Johnson and the CTU have sought to shift the onus of funding the upcoming CTU contract onto Springfield, but their demands have so far been met with tepid reaction by Gov. JB Pritzker, who is in the midst of his own challenging budget process for the state.
Still, the presentation from Johnson’s team continued to reflect a bullish outlook on Springfield coming through: “The City is committed to disentangling from CPS at a pace that allows CPS to transition to more State funding.”
