The Wall Street Jounal Editorial Board blasts Chicago Mayor Lori Lightfoot for her deal with the Chicago Teachers Union (CTU). The deal will further wreak havoc on the already insolvent school system.
Who will be hurt most?
The WSJ answers the question this way: Union Routs Students in Chicago.
Contract Details
- 16% raise over five years (not including raises based on longevity)
- Three-year freeze on health insurance premiums
- Lower insurance copays
- Caps on class sizes
- More than 450 new social workers and nurses.
- New job protections for substitute teachers who going forward may only be removed after conferring with the union about “performance deficiencies.”
- Chicago Public Schools will become a “sanctuary district,” meaning school officials won’t be allowed to cooperate with the Immigration and Customs Enforcement without a court order.
- Employees will be allowed 10 unpaid days for personal immigration matters.
- Under the new contract, a joint union-school board committee will be convened to “mitigate or eliminate any disproportionate impacts of observations or student growth measures” on teacher evaluations.
- Instead of student performance, teachers will probably be rated on more subjective measures, perhaps congeniality in the lunchroom.
- The new union contract caps the number of charter-school seats, so no new schools will be able to open without others closing.
Get the Hell Out
The WSJ commented “Michelle Obama the other day complained that white people were leaving the city to escape minorities who are moving in. No, they’re fleeing Chicago’s high taxes and lousy schools—and so are minorities.”
Chicago Public School Bond Ratings
Chart from CPS Credit Ratings.
You can kiss those positive and stable outlooks goodbye. The system is insolvent and this contract will further weaken the outlook.
Bond Rating Comparison
Chart from Wikipedia, yellow highlights mine.
S&P already has CPS bonds in the “highly” speculative area, five steps into its junk ratings.
Pension Spiking
A Chicago Teacher’s Pension is based on your years of service and a pension percentage (up to 75%), multiplied by your final average salary. Their union notes “There are ways to increase these factors to enhance your pension or meet eligibility requirements.”
Let’s Discuss Pensions
Wirepoints asks Chicago Teachers Strike: Why is No One Talking About Pensions?
The average retired CPS teacher already receives a pension of nearly $55,000 a year, according to a 2019 FOIA request to the Chicago Teachers’ Pension Fund.
However, looking at the pension of an average teacher far understates the true size of CPS pensions. The “average” benefit includes teachers who only worked a few years for CPS, which brings down the average.
To get a more accurate picture of what pensions are really worth, look at career teachers. Over half of all currently retired CPS teachers worked 30 years or more. On average, they receive a $72,000 annual pension and began drawing benefits at age 61.
In comparison, the average annual Social Security payment in Chicago is just $16,000 and the maximum benefit for someone retiring at age 62 is $26,500.
C-O-L-A Cola, la la la Payola
The average career CPS pension will grow by 3 percent, compounded annually, due to the COLA benefits teachers get. That will double a teacher’s annual benefit to over $140,000 in 25 years.
Teacher Contributions
Wirepoints Projections
Those projections were based on the proposed contract. The CTU held out for even more benefits and got them.
Pension Funding Level
The Chicago Tribune notes that the end of 2018, City Hall’s pension funds had only 23% of what they should have.
By 2023, Lightfoot must find an additional $989 million a year for pensions, according to the Tribune’s Hal Dardick and Juan Perez Jr. Thank you, former mayors and aldermen, for promising more pension benefits than Chicagoans could afford.
Who Will Pay?
That one is easy.
- The kids will suffer because charter schools are reined in, grading standards lowered, and incompetents were given further projections.
- Taxpayers will face higher property taxes, higher gas taxes, and higher sales taxes with every penny going to pensions.
Get the Hell Out
On October 5, I commented Escape Illinois: Get The Hell Out Now, We Are
Goodbye Illinois. Hello Utah. See my reasons for Utah above.
If you can’t get out of Illinois, do the second best thing, Get the Hell Out of Chicago.
By the way, Chicago is not “headed” for insolvency, it’s already there, but it is just not recognized yet.
Mike “Mish” Shedlock
Mish, You are exactly right. And it’s not just Chicago, but any Democratic led city and state. Their only hope is declaring bankruptcy since they cannot pay off the debt. The last time the states went bankrupt was in the 1840s when nineteen of the twenty-six U.S. states were in default. See
State bankruptcies in the 1840s, link to en.wikipedia.org. Keep up the good work.
“Michael” Obama complains that whites are leaving because blacks are moving in?? Either she’s wrong and her implication to blacks is insulting because it implies they are some kind of economic plague that educated people will flee OR she’s right and in that case who can blame people for getting to a better state? If blacks are the economic plague, should whites remain in order to take care of them?
Either way, Michael has egg on his face.
Like the sole-source journalists who cite only Shadow Stats cause SS’s inflation number is lots bigger than everyone else and will get people all mad (a la Fox news strategy), journalists who only cite Wirepoints, Wirepoints, and only Wirepoints and no one else, would be equally wobbly in making their points … sorry Mish. 🙂
Can you read at all?
“You can kiss those positive and stable outlooks goodbye.”
Whyfore aren’t they already gone? Even the rating houses should be rating them as “Look Out Below!”
Get out early and avoid the rush!
Chicago peaked with 3,621,000 people in the 1950 census. Since then it has been all downhill. In the last census (2010), population sat at 2,696,000. No American city has lost more people…not even Detroit. Chicago has been failing for 70 years. It’s mindboggling that some folks are just now starting to figure it out.
I’d stay and be a tourist but I can’t take the gun play.
“It’s mindboggling that some folks are just now starting to figure it out…”
Sorry, we were too busy to notice… link to census.gov
I became a statistic back in July. I am an official Illinois refugee. I should have left 4 years ago! It’s the pits!
“Debts that cannot be paid will not be paid.” Lightfoot is merely continuing the tradition the jerks preceding her set: leave the successor holding the bag. But when the bag is empty, what then? No number of strikes and lawsuits can make up for zero. There will be default. Pensions will go unpaid, and retired teachers on permanent vacation will have to learn how to actually retire: stay home, keep the lights and heat low, and get by on Social Security, since they blew their savings at the casino on the last 25 cruises. Social security will never go unpaid, because money can be printed to cover that. Pensions, though? Ehhh, no.
Education is a democratic run system. Not just in Chicago or in public schools. It’s at the university level too, backed by Sallie Mae. Dems guarantee high paying jobs in exchange for votes and brainwashing students into becoming democrats.
It’s the same thing with federal government jobs. The federal government hates Trump because he’s a threat to their job security.
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So much waste (trillions) in military spending, so much theft by the corrupt elite and so many hand-outs to corporations, but the ignorant (and apparently uneducated) right gangs up on teachers. Why? Because you don’t think education is useful beyond reading the Bible.
Go ahead. Eliminate public schools and fire all the teachers. Fuck education. Who needs it, right? LOL
I agree with Snow_Dog except I am not in favor of firing all the public sector teachers. The US needs more good teachers. The problem illustrated here is that money US taxpayers do not have is being taken from those who cannot afford it and those who cannot consent to it (future generations that cannot yet vote, for example). The US public education system also appears to be spending a lot of effort these days heavily indoctrinating students to be “pro-government” in addition to achieving poor academic results. Corporatism in the US is also a problem. The US Medical system is also a problem. There are many problems. The topic on this thread just happens to be the education system, and one of tried and true methods of shutting down critical thinking about this subject is to pronounce that support for higher teacher pay is sacrosanct, no matter the grim reality.
I’m a product of United States public schools and most of my teachers were lazy. If American teachers cared half as much about their students as they do their paychecks, maybe they’d actually earn their pay. I’ve taught in three different countries in east Asia and the teachers there actually work hard, maybe because the mothers actually demand it. In the USA, we have guys like Dexter Manley completing elementary school, middle school, graduating high school and making it to his senior year at Oklahoma State University without even being able to read. He didn’t learn how to read until years after he left the American public school system. His many different public school teachers didn’t care about Dexter, but at least he made enough money with the Washington Redskins to hire a competent tutor.
I agree with you about the wasteful military spending and corporate welfare. I just wish public school teachers in the USA would take the same pride in their work as the teachers in South Korea, Japan, China, and elsewhere so we wouldn’t continue to fall so far behind in education and knowledge. It’s amazing that American public school teachers have the gall to demand even more money after failing so miserably.
Great article. I hope it shows clearly how people can be robbed by a rigged system.
When you run a public service, there has to be tax to pay for it. That is fair enough if the net benefit provided to taxpayers is greater than the tax. The problem comes when you raise tax for something where there is no benefit or even theft/legalised theft. It is difficult for ordinary people to keep track of all the schemes/scams that government bodies come up with, and as a result you get more and more scams where taxpayer money is diverted into private hands with little value being returned to taxpayers.
The other scam that is going on is the Ponzi pension scam made possible when you have pooled schemes. We all know that many of these pension schemes will fail. Sadly many of those in the pension schemes dont realise. Those paying into the schemes will find that there is nothing left one day soon. The first retirees have made off with the lot.
It is legal thievery. Chicago and like jurisdictions make agreements and sets policies known to create future liabilities people cannot afford. When those liabilities come due, “precedent” has been set that the liabilities must be paid due to their having been on the books for a long period of time. At that point, the state financially rapes everyone subject to their jurisdiction with lawyers looking on in approval. There needs to be a word that describes government and state unions conspiring against citizens to steal from them in the future. If citizens conspire to overthrow government it is called “sedition” or “treason.” When government conspires to steal from citizens it is called what? Justice? Legal Process? The best word I can come up with is “tyranny” and that does not fit well. Something is very wrong with this situation and it is happening in many places in the US.
very good point, I would just add, the Poor ratings agencies for ignoring the numbers and seducing ALmost everyone that all is good, and then blame some one/thing when it crashes.
At 23 % pension funding, the whole system has been INsolvent for 10 + years.
The Ratings Agencies, like all involved, are betting on a federal and Fed bailout. In fully financialized, progressive dystopias; leeching politicians, beaureaucrats and retired such’, and similarly leeching deadweights in the financial rackets funding them and the “legal” rackets making bank from overseeing it all, are all part of The More Equals. The systems enabling them to leech off of the efforts of others, are always to be “saved.”
Coming up with excuses for why “we” (that’d be the productive non-racketeers who’s designated role is to pay for it all”) need to “Save The System” is all that any of those leeches ever do.
And as long as enough of even those designated as payers, are so darned indoctrinated they fall for that partyline, rather than realizing even full blown Mogadishu in the 90s is a massive improvement over any such “system,” those saps, along with those of us less illiterate but unfortunately stuck on the same planet as riffraff like that, will take the fall before those in the More Equal classes are forced to reign in their undifferentiated leeching.
Chicago is a text book example of what happens when the people put in charge are only good at one thing: Politics. At everything else they seem even worse than incompetent.
Let us not forget the continual lowering of interest rates so the massive debt berg doesn’t have to be written off and to monetize government overspending has decimated the ability for pension funds to make any kind of return. This problem is by no means limited to Illinois, California is not far behind.
Taxpayer butcher of the world.
At this point does it even matter what they do? They went beyond the point of no return years ago.
What Californians, as well as many other Americans, and hundreds of millions of people around the world need to give up on is living where they think they ought to be able to live. Californians are busy building new neighborhoods into the rightful territory of giant fast moving infernos; post Hurricane Texans think they have the right to build in low elevation Houston, and poverty-stricken Bangladeshis and Indonesians think they should hold on to the shores they’ve always lived on. Houston is technical debt. New Orleans is technical debt. Puerto Rico is plagued by intertwined monetary and technical debt. link to emptywheel.net
Also, Utah has a Free Range Children law.
Utah is a theocracy which is very quickly becoming a colony of California (nee Mexico). Not making a moral judgement…just an observation. I lived there. It wasn’t at all what I expected on the way in. It wasn’t what the local chamber of commerce folks promised. Fortunately, all the Calirefugees are driving real estate values through the roof and I was able to undo my mistake, at a profit, no less.
Theocracy > Democracy any day, once the latter has fallen prey to a progressive movement.
Utahns have kids. At least for now. They’re harder to dilute than the residents of many other places. While Californians, don’t have kids. Restricting their powers of dilution. In the battle for the future, the kids and the fertile will always beat the geezers and the practicing homosexuals. Which is why Gods, Saints and Prophets intent on sticking around longer than Jim Jones, are all obsessed with fertility and Go Forth and Multiply. Not political correctness and women’s lib.
Being that Mish is an Illinois refugee concerned about being robbed to keep an unworkable pension racket from being accepted as such, fertility is also a buffer against the immediate fallout of that class of problems.
“By 2023, Lightfoot must find an additional $989 million a year for pensions, according to the Tribune’s Hal Dardick and Juan Perez Jr. Thank you, former mayors and aldermen, for promising more pension benefits than Chicagoans could afford.”
Lightfoot isn’t a former mayor. Thank Chicagoans for voting for more of the same.
As soon as champagne liberals see the impact on their tax bills for their million dollar homes they will put Lightfoot out to pasture.
They virtue signal one thing but truly believe quite another.
“Who will be hurt most?”
The children.
“Who Will Pay?”
The people of Chicago voted for this. They have asked time and time again for their taxes to be raised.
Not The. Some. Big difference there.
As long as only the ones voting for it pays, fine. As soon as someone who didn’t vote for it, is forced at gunpoint to do so, it’s no different from any other robbery at gunpoint.
You and me locking up and stealing some old lady’s stuff, doesn’t magically become A-OK, just because we all happen to live in a city with a population of 3; and “voted” for it beforehand.
No one is being forced to live in Chicago and pay those taxes, so all residents are supporting the Zombie City, either directly or indirectly.
And no niggas were being forced to live on some plantation, either. They could, after all, hang themselves and die. So am I hence to assume they, too, supported the system they lived under?
There is no Fugitive Slave Law that allows the city of Chicago or the state of Illinois to demand that other cities or states must allow slave catchers to grab ex-Chicago or ex-Illinois residents and send them back to the “plantation”.
At least, not yet …
If we elect one of the socialist Democratic Presidential candidates, I wouldn’t be surprised if he or she tries to make it impossible for Americans to move out of blue states and into red states without surrendering their money and property first.
Leave NOW, Mish, before they send the tax men and slave catchers after you.
“I wouldn’t be surprised if he or she tries to make it impossible for Americans to move out of blue states and into red states without surrendering their money and property first.”
Actually a very fair policy if applied to state pensioners. You want to reap the benefits of state employment, then you enjoy it in that state during retirement.
You would support a Fugitive Pension Law?
It’s quite common for retired people to move to a warmer climate, or a state with lower taxes, or wherever their grandchildren are living.
A law such as this would run afoul of the “interstate commerce” clause in the US Constitution, among other things. You can’t tax people outside of your own state selectively, if this was allowed then every politico would tax anyone from the other 49 states at 100% if they so much as drive through or fly over their state.
RFID Travel Passes For Internal Movement is an idea the lefties are just dyin’ to implement. Of course, the requirements will simply be too “onerous and oppressive” for PoC and border hoppers, so they’ll be excused.
actually it is ok. that’s the magic of “democracy”
“Not The. Some. Big difference there.”
it’s well more than some.
I continue to believe that the left’s grand plan under Hillary was to gain access to the taxing power of the state via sudden, belated post-election discovery that cities like Chicago were inexplicably bankrupt and needed emergency rescue via Fed takeover, as in the plundering of GM bondholders and handing of GM to the UAW during the GFC, thereby impoverishing many GM employees confidently betting on creditor priority and all past precedent in holding GM bonds.
The Donald’s usurpation of “their” White House blew up that plan. Mayor Lightfoot is now setting the stage for another run at our wallets. Talk about desperate for impeachment…
I see the situation as “Too Big To Fail”, but applied to the public sector. The poison spread through the system are bonds issued by dead-beat states and municipalities that end up in public retirement funds. Until the bonds mature or are sold to pay for retirees, they might just be marked at face value. Since no municipality can hold its own bonds, they hold other municipalities’ bonds. They are all gaming the system for a taxpayer bailout, but none wants to be the default that crashed the system. Chicago may have just taken that honor with the latest teachers’ contract.
For political points, a defaulting city will ask President Trump for a bailout. Of course he will say no, at which point he gets blamed for all those years municipalities negotiated expensive contracts and borrowed to pay teachers.
The part about this that I find interesting is that we will be able to find out at what point raising property tax rates will begin to actually decrease tax receipts. At some point, raising rates will reduce property values so much that actual receipts fall.
It’s extremely common in detroit to over grossly assess house values, and the millage rate is astronomical. The suburbs are being taxed for the city’s zoo, art institute, ect, and detroit has the water department where our rates are worse than those in the Los Angeles, Ca. BTW, they have been “saving” detroit since 1968 and the population has dropped over 2/3. There is no capital in detroit so why capitalize the name, and it’s not a proper noun (neither is cess pit).
Right up until there’s a revolt until then prepare to go broke and lose everything. They dont want anyone to own anything anyway. This is a renter society. Ive had it.
Steinbeck explained the con in all its glory in The Grapes of Wrath. Give away the raw land. Let the suckers borrow to improve it. Put in all that hard work, then when they can’t pay the note, take it back…fully improved. This is that, sort of. Once the city gets it all back, they’ll find a new class of suckers to start the con all over again.
It is a common misconception that property taxes are a ‘rate’ of your property values, rather than an absolute levy, which they are. In other words, if everyone’s property values are falling, it doesn’t matter; the tax dollar amount remains the same and the government will get their “receipts.” They assess the total tax levy and they get it. They don’t “fall” or “rise,” depending on values. Thus, if you and all your neighbors houses in a district all fall by 20%, you all will be paying the same taxes regardless.
Additionally, if you meant that receipts would fall because homes would go vacant and no one will be there to pay, that’s not necessarily true, either. The property will be sold or auctioned off with the stipulation that all taxes and back taxes are paid.
Perhaps it varies by state? In every state I have lived in, Property Taxes are a rate, say 2% of the valuation. When property values fall, in order to see your actual taxes fall, you have to protest the valuation, and go through hearings to get your value reduced, but if you get the value reduced, the taxes you pay will fall.