Whose Ox Gets Gored?

by Dave Schuler on April 4, 2013

Dovetailing neatly with my post earlier today, this Wall Street Journal editorial adds an additional wrinkle to the discussion of the Chicago Public Schools:

Chicago Mayor Rahm Emanuel may have thought he bought labor peace when he agreed to a fat increase in teacher pay to settle a strike last year. Instead the Chicago Teachers Union is throwing massive resistance against his plan to close 54 under-used public schools.

The closings are part of the city’s attempt to address a budget gap projected to be $1 billion next year thanks to years of fiscal mismanagement. Annual pension payments for Chicago teachers will rise to $593.3 million from $218.6 million by 2016, and the city has to finance that 16% teacher pay raise over four years. Chicago Schools CEO Barbara Byrd-Bennett says closing the 54 schools that are operating at less than 69% capacity will save some $43 million in operating costs next year and $560 million in capital costs over 10 years.

[…]

The real racial offense is leaving another generation of black children to languish in some of the nation’s worst schools, with a high school graduation rate near 60%. Chicago’s black population dropped by 181,000 between 2000 and 2010, and much of that decline is on the South and West sides. The Chicago Public School system now has only about 400,000 students despite a capacity for 500,000.

Ms. Lewis’s real fear is that closing those schools will expedite student migration to non-union charter schools. There are currently 119 charters operating in the city and serving some 40,000 Chicago students. Last year the charter waiting list was more than 19,000, one of the longest in the country.

In Chicago, two-thirds of charter schools perform better on state assessment tests and at charter high schools three-quarters of graduates go to college. A recent poll by the Joyce Foundation and Chicago Tribune found that about two-thirds of Chicagoans support new charters opening in neighborhoods where kids are on the waiting list and 67.9% say it should be easier for charters to expand.

Charters also save the city money. State law says charters may get between 75% and 125% of per pupil spending in the district. But in practice most get an average of 78% what Chicago spends per pupil on traditional public schools, according to the Illinois Network of Charter Schools.

The CTU’s position paper on school closings, their disproportionate effect on black students, and charter schools is here.

I continue to wonder where the CTU proposes that Chicago will get the money it needs to follow the CTU’s prescriptions for Chicago schools.

{ 6 comments… read them below or add one }

jan April 4, 2013 at 12:04 pm

The real racial offense is leaving another generation of black children to languish in some of the nation’s worst schools, with a high school graduation rate near 60%.

Everytime there is a legislative battle to relocate children out of dismal schools, like what happened in Louisana a few months back, the teachers come back with a mantra of “don’t do this…for the children’s sake!” It’s such BS too, as no one is thinking about the children — especially poor minority children. The driving force, to keep the educational status quo intact, is for the benefit of the teacher unions — period.

C Stanley April 4, 2013 at 1:17 pm

How much of the per student expenditure differential between the union public schools and nonunion charter schools is due to the pensions, I wonder? I’ve heard that issue arise in discussions of foreign automakers having that advantage when they started up in US plants. Obviously over the long run, the nonunion shops avoid the union pressures for overly generous pension packages anyway, but the fact that they are startups without the legacy of pensions makes a large difference too, presumably.

PD Shaw April 4, 2013 at 1:40 pm

C Stanley, “More than 93 percent of charter school employees participate in state pensions, according to the National Alliance for Public Charter Schools.”

http://news.heartland.org/newspaper-article/2012/02/10/irs-regulation-could-threaten-charter-school-teachers-pensions

I think schools (and according to the link, charter schools also) prefer the government pension programs to having to contribute to SS because its cheaper. [Insert joke here]

Dave Schuler April 4, 2013 at 1:49 pm

How much of the per student expenditure differential between the union public schools and nonunion charter schools is due to the pensions, I wonder?

That’s a more complicated question than you might think. Pensions of Chicago teachers are paid by the state-mandated and city-administered Chicago Teachers Pension Fund. 2% (!) of teachers’ pay is deducted from paychecks and paid into the fund. The CPS pays another 7%. The actuarial report for the fund is here.

The projected rate of return for the fund is 8%, something I’ve been criticizing for years. The actual rate of return for the fund is around 1% (thank you, Ben Bernanke). The state make a very small (something like $11 million per year) contribution. Shortfalls are made up by the Chicago Board of Education. I honestly don’t know whether that’s counted in the per-pupil calculation or not.

Compare this with the state’s other school systems. In theory by law 9.4% of a teacher’s salary goes into the Illinois Teacher’s Retirement System. In practice most or all of that is paid by their districts (555 of the state’s 867 districts pay the employee contribution as a benefit).

The state makes up any shortfall. That means that I’m paying Chicago’s teachers’ pensions and Naperville’s teachers’ pensions while Drew is only paying Naperville’s teachers’ pensions. The big controversy in the state right now is the plan to dump all or most of the responsibility for paying teachers’ pensions back on the districts. As a Chicagoan I’m all for it.

Note that teachers in Illinois do not pay Social Security. That means that a teacher in Chicago who gets paid a salary of $100,000 has $2,000 deducted for pension for a net pay of $98,000 and the CPS pays another $7,000. A self-employed dentist who earns $100,000 pays $6,200 for the employee contribution and $6,200 for the employer contribution for a net pay of $87,600. The payout for that nominal contribution by the teacher is gargantuan—70% of pay.

C Stanley April 4, 2013 at 1:57 pm

I knew about the basic issue of underfunded pensions (though not about the details of who pays what portion, so thanks for the info.) What I was completely unaware of was what PD pointed me to- that currently most charter school teachers are considered public employees and eligible for the pensions out of the same pot as their district school cohorts. I guess I’d never thought much about it and had assumed they were employees of the charter company and paying into/drawing out of SSI.

PD Shaw April 4, 2013 at 3:01 pm

Also, about 12.3% of charter school are subject to collective bargaining agreements. That’s the situation in my school district, and since only 9 out of 102 charter schools in Illinois are considered “union,” I have to deduce that Chicago charter schools are not union.

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