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  #441  
Old 07-17-2019, 02:11 PM
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https://wirepoints.org/chicagos-ligh...ract-14-raise/

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Chicago’s Lightfoot demands a state taxpayer bailout, then offers CTU a 5-year contract, 14% raise?
Spoiler:
You have to wonder whether Chicago Mayor Lori Lightfoot really thought she could get away with it.

Just three weeks ago, she was demanding a state taxpayer bailout of her city’s nearly bankrupt pension funds. The problem was so big, she said, she’d risk her “re-election” over it. Eventually, Gov. J.B. Pritzker denied her bailout request for obvious reasons – the state is just one notch from a junk rating.

Now news reports confirm that Lightfoot has offered the Chicago Teachers’ Union a five-year contract that will cost taxpayers another $325 million. That includes guaranteed raises of more than 14 percent over the life of the contract. And that, of course, turns into more pension benefits and an even bigger pension hole for CPS.

That’s an expensive gift for a city that Lightfoot claims is in need of a multi-billion dollar bailout.

That about-face should infuriate every downstate Illinoisan. If the bailout had gone through, here’s what all Illinoisans would have been paying for:

1. Chicago teachers are already highest paid vs. teachers in similar districts.

Chicago teachers are the nation’s highest paid when compared to the largest school districts with traditional salary schedules, according to data from the National Center on Teacher Quality.

For example, a Chicago teacher with a master’s degree receives $80,000 a year after ten years of work. In contrast, an equivalent teacher in New York City makes $70,000 and a Los Angeles teacher makes $60,000.



A big reason for that is due to how fast Chicago teacher salaries grow. The average new teacher with one to four years under her belt starts out with a salary just above $50,000. By the time that teacher reaches 10 to 14 years of service, her salary grows to more than $85,000 annually.



2. The average career Chicago teacher will get $2 million in total pension benefits, far more than ordinary Illinoisans.

High salaries translate into big pension benefits for career teachers. The average CPS teacher who retired in 2018 with 30-34 years of service had a final average salary of nearly $98,000 and a starting pension of over $70,000. Their average retirement age was 61.



That pension will increase automatically by 3 percent each year and by year 25 of retirement, the pension will be double its starting amount. In all, the average retired career Chicago teacher will collect over $2.1 million in benefits over the course of her retirement.

In contrast, an ordinary Illinoisan at retirement would need to have around $1.5 million in his or her account at retirement to collect the same amount of benefits as a career Chicago teacher. Most Illinoisans will never save that amount of money.

3. Taxpayers still “pick up” a majority of Chicago teacher pension contributions.

Not only do Chicago teachers receive millions in pension benefits, they contribute almost nothing towards them over the course of their careers.

Chicago teachers are supposed to contribute 9 percent of their salary every year towards their pensions. But every year since 1981, CPS has paid for, or “picked up” 7 of that 9 percent.

That means Chicago teachers only have to pay 2 percent of their salary towards their own pensions every year. That costs Chicagoans over $100 million a year.

Rahm tried to reform pickups in 2016, but he was rebuffed by the union. Only new workers lost the pickup. And even then, the district gave out extra 3.5 percent raises in exchange.

4. CPS is losing students but spending more on them than ever before.

One of the CTU’s contract demands calls on CPS to spend money to hire more teachers and even more support staff. That might make sense in a dynamic, rapidly growing city with a growing school population.

But CPS is losing students and has been for nearly 20 years. At the same time, the district’s spending per student has jumped.

In all, CPS’ per student spending has doubled since 2000 according to ISBE, even as the district’s enrollment has fallen by nearly 75,000 students, or 17 percent, over the same time period.



5. Near empty, failing schools should be closed and their resources redirected.

Declining enrollment is hitting some Chicago schools particularly hard.

In 2017, the Chicago Tribune examined the demographics of some of the most underpopulated schools in Chicago. It found the enrollment of the 17 worst schools has dropped from nearly 20,000 in 2008 to just over 4,600 today. Their buildings are, on average, filled to just 20 percent capacity.



And the few students that do attend aren’t getting a good education. In those schools, no more than 8 percent of students are ready for college. Despite that, the CPS hasn’t closed the nearly-empty, failing schools.

**********

Lightfoot has landed some great punches when taking on corruption in City Hall, but when it comes to finances, she’s acting just like any other Chicago politician.

She said she’d “risk her political career” to tackle pensions. Making downstate taxpayers foot the city’s pension bills is hardly a “risk.”


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  #442  
Old 07-17-2019, 02:12 PM
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https://fixedincome.fidelity.com/ftg..._110.1#new_tab

Quote:
Chicago inviting buy side to town in September

Spoiler:
Chicago Mayor Lori Lightfoot and her finance team will make their case for the buy side to stick with the city at an annual investors conference set for Friday, September 20.

Lightfoot’s chief financial officer, Jennie Huang Bennett, announced the date Monday and a “save the date” notice was being distributed to the buy side and other municipal market participants.

The annual gathering, launched by former Mayor Rahm Emanuel’s finance team after he took office in 2011, is typically well attended by bankers and advisors as well as investors.


Additional details on the schedule and location are still in the works, but Bennett said the city’s sister agencies, which include the Chicago Transit Authority, Chicago Public Schools, and Chicago Park District, would participate. Lightfoot will also address investors.

The city will have plenty to present. The 2018 comprehensive annual financial report was recently published and the city will release its annual financial analysis laying out the scope of 2020 budgetary strains and a three-year forecast this summer.

"While Chicago's financial challenges loom large for next year and beyond, Mayor Lightfoot's administration is working to address them head-on by developing a sustainable road map to address our liabilities and put our government on track for building stronger, safer communities and economic growth for our city's future," Bennett said.

Lightfoot, a first-time officeholder who took the city's reins May 20, is also expected to have released her plans to address the city’s budget and pensions woes ahead of the conference based on her recent comments. The next year’s budget is typically introduced in October.

Bennett had no update on budget solutions or timing Monday. “It’s a very large gap and so we are still working through the options to address it,” Bennett said, who also said it's too early to rule out or in any options.

The city is eyeing various management efficiencies in an effort to rein in spending before turning to new or higher taxes and fees, but Lightfoot has warned that new revenue will clearly be needed.

The city also likely will conduct tours at the conference. Past tours have included the Chicago Riverwalk, the Jardine water plant on Lake Michigan, and O’Hare International Airport.

Investors have been clamoring for fiscal updates.

“Mayor Lightfoot’s career has centered on the justice system, and while various criminal and enforcement matters are very important to quality of life issues, she does not have a background in the finance and budgets that most concern investors,” said Howard Cure, director of municipal bond research at Evercore Wealth Management. “Therefore, it is important to understand her philosophy toward tackling these concerns and meeting with her various cabinet appointments that will be in charge of implementing her vision as she strives for budgetary stability.

“I think the investment community gained a certain level of confidence in the fiscal management of Mayor Emanuel as he tried to address the city’s operating deficits and long term liabilities, especially pension issues, while successfully attracting businesses to Chicago and expanding the tax base,” said Cure, who has made the annual trek.

The administration used last year’s early August conference to unveil a $10 billion pension obligation bond proposal. It appeared on the fast track before stalling and Lightfoot views the proposal negatively.

The prior administration put the 2020 operating gap at $600 million to $700 million to cover rising debt, pension, and personnel expenses. The structural deficit last year was projected at $250 million.

The city’s CAFR published earlier this month disclosed the net pension liability tab had risen by $2 billion in 2018 to $30 billion but on the positive side the city’s ending balance had risen to $332 million from $288 million.

The city’s GO bonds are rated at BBB-minus by Fitch Ratings, A by Kroll Bond Rating Agency, junk-level Ba1 by Moody’s Investors Service, and BBB-plus by S&P Global Ratings. All assign a stable outlook.


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  #443  
Old 07-23-2019, 10:18 AM
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Mary Pat Campbell
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TEACHERS

https://chicagocitywire.com/stories/...-union#new_tab

Quote:
Wirepoints: Denied pension bailout, Lightfoot makes generous offer to Chicago Teachers Union

Spoiler:
On the heels of asking the state for a taxpayer-funded bailout, Chicago Mayor Lori Lightfoot is offering the Chicago Teachers Union (CTU) a five-year contract and a 14-percent pay raise, according to a Wirepoints report.

"You have to wonder whether Chicago Mayor Lori Lightfoot really thought she could get away with it," Wirepoints said in an online article posted Wednesday. "Just three weeks ago, she was demanding a state taxpayer bailout of her city’s nearly bankrupt pension funds. The problem was so big, she said, she’d risk her 're-election' over it. Eventually, Gov. J.B. Pritzker denied her bailout request for obvious reasons – the state is just one notch from a junk rating."

Illinois Gov. J.B. Pritzker
Illinois Gov. J.B. Pritzker | twitter.com/jbpritzker
Denied the bailout, now Lightfoot is offering CTU a contract that will cost taxpayers an additional $325 million and includes guaranteed raises of more than 14 percent, Wirepoints reported.

"And that, of course, turns into more pension benefits and an even bigger pension hole for CPS," the article said. "That’s an expensive gift for a city that Lightfoot claims is in need of a multi-billion dollar bailout."

Lightfoot defeated Cook County Board President Toni Preckwinkle in April's runoff election for the seat of now former Chicago Mayor Rahm Emanuel. Lightfoot is the first black woman and first openly gay mayor of Chicago and the second woman to be elected to the job. Prior to becoming mayor, Lightfoot was a partner with the law firm Mayer Brown Chicago and held a number of city government positions, including serving as president of the Chicago Police Board and as chair of the Chicago Police Accountability Task Force.

Lightfoot's offer to CTU so soon after asking for a bailout "should infuriate every downstate Illinoisan," the Wirepoints report said.

"Lightfoot has landed some great punches when taking on corruption in City Hall, but when it comes to finances, she’s acting just like any other Chicago politician," the article said. "She said she’d 'risk her political career' to tackle pensions. Making downstate taxpayers foot the city’s pension bills is hardly a 'risk.'"


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  #444  
Old 07-29-2019, 02:07 PM
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https://fixedincome.fidelity.com/ftg..._110.1#new_tab

Quote:
Chicago Public Schools plans up to $432 million of refunding bonds

Spoiler:
The Chicago Board of Education signed off on up to $432 million of general obligation refunding bonds as work continues on a fiscal 2020 budget and negotiations on a new teachers’ contract heat up.

The refunding would be completed “for traditional savings” and not for restructuring purposes, said board spokeswoman Emily Bolton. “While savings are contingent upon market conditions, the district hopes to see $10 million to $15 million in cost savings in fiscal 2020.”


It’s not clear whether all the savings are being taken up front or there’s a net present value savings over the life of the bonds.

Interest rates remain steep for junk-rated Chicago Public Schools but it’s been chipping away at those penalties on both short and long-term borrowings.

The district’s last competitive cash flow note sale drew widespread interest. Yields landed at 1.95% and 2% on two tranches of an unrated $250 million sale of tax anticipation notes that come due in October. Those rates are down from 2.45% and 2.65% in TAN sales late last year. The district paid punishing rates of 4.8% in prior fiscal years.

The long 28-year bonds in the district’s last GO sale in December landed at a spread of just over 200 basis points to the Municipal Market Data top-rated benchmark. The district saw a punishing 480 bp spread on its long 29-year bond in a GO sale just ahead of mid 2017 passage of new state aid.

An infusion of new state operating and pension funding help in 2017 along with several local tax levy hikes helped trim a $1 billion deficit, easing a budget and liquidity crisis that has kept three of the district’s four bond ratings deep in junk territory.

Fiscal pressures still hold a grip on the district heading into the next fiscal year. The budget for the fiscal year that began July 1 is expected to be unveiled and approved later in the summer.

The board last year approved a $6 billion fiscal 2019 operating budget, $1 billion capital program, and more than $2 billion of new money, refunding, and short-term borrowing at its July meeting, but there have been past years where the spending plan was not unveiled until later in the summer.

The recent TAN offering statement warned “the board’s ongoing financial outlook will continue to be determined by factors such as labor, pension, and debt service costs as well as the ability of the board to raise revenues and reduce certain expenditures.”

The district’s 2019 pension contribution totaled $809 million, of which $239 million is coming from the state and $430 million from a special pension levy. The teachers’ fund is at a 50.1% funded ratio.

The district has enjoyed positive rating actions since the state approved new funding. In July 2018, S&P Global Ratings upgraded it to B-plus from B and Moody's Investors Service (MCO) boosted the district to B2 from B3.

Teacher contract negotiations resumed Thursday between the Chicago Teachers’ Union and officials from the district and new Mayor Lori Lightfoot’s administration.

The two sides have butted heads and the union has warned a strike is a possibility. That would put a black mark on Lightfoot’s early tenure. The school year begins the day after Labor Day but the earliest teachers could strike is Sept. 26 based on required legal procedures.

The CTU has slammed a city/district $300 million contract offer that provides a 14% raise implemented over five years and it wants a commitment on additional school nurses and social workers and smaller class sizes.
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