Chicago Teachers Union Leader Leads with $50 Billion Number Before Negotiations
Some facts for the CTU leader to consider in building her BATNA
Well, I’m done with avoiding beating up on Chicago.
Here is the “opening move” from the Chicago Teachers Union in addressing the City Club of Chicago (via Wirepoints): Cost? ‘Stop asking that question,’ says Chicago Teachers Union president Stacy Davis Gates in strident speech about contract demands – Wirepoints
“It’s gonna get a little hot in this city in the next few months” over contract negotiations with teachers. That’s from Chicago Teachers Union President Stacy Davis Gates’ address to the City Club of Chicago yesterday.
That sure sounds right based on the rest of her speech. Gates told us what the CTU is. “We are a whole bunch of people who have been told no. Don’t, Forget about it. Don’t even think about it. No. Poo.” And this time, they won’t accept those answers, which was the primary point of the speech. It’s all part of the CTU’s broader “movement,” a term she used throughout the speech.
On that nasty subject of (dare I say this?) money, Gates was stridently indifferent.“They’re gonna say, ‘these are great proposals and can’t nobody pay for it and CTU with all of this, that and the other and who’s gonna pay for it, Stacy?’ ”
“Stop asking that question,” she said. “Ask another question.”
Fine, I’ve got plenty of other questions:
What do your union members produce for the city of Chicago?
Why should the taxpayers of Chicago care about what you want when it’s not tied to fiscal reality?
Why should anybody take your toddler tactics seriously?
and finally…
What are CTU members getting for their dues?
Let’s stack it up
Austin Berg of the Illinois Policy Institute put the numbers together:
Given how cavalier the CTU leader is being with the numbers, and one thing I’m about to link, I’m curious if the negotiation position really is $50 billion… I’m assuming this is just exaggerating for effect.
Illinois Policy from February 2024: CHICAGO TEACHERS UNION IGNORES OWN MANDATE FOR FINANCIAL TRANSPARENCY
The Chicago Teachers Union hasn’t released an annual audit, required by its internal rules, for at least four fiscal years. What’s happening with members’ dues?
The Chicago Teachers Union is required by its own internal rules to provide an audit of its finances every year.
It has failed to do so for at least four years.
Uh.
So that’s not a great sign.
I don’t know what’s going on there, and if I were a CTU member, I can’t imagine feeling good about that situation.
According to one CTU member, the last audit available in the member portal is for the 2018-2019 fiscal year. Audits for at least four years: 2019-2020, 2020-2021, 2021-2022 and 2022-2023 are nowhere to be found. When questioned about the missing audits, Davis Gates personally attacked the member, labeling the call for the release of the required audits a racist “dog whistle.”
Since then, the person serving as CTU’s finance director, Kurt Hilgendorf, has responded that the audits for 2019-2020, 2020-2021 and 2021-2022 have been procured, but are “just not quite done yet.” He made no mention of the fourth missing audit – for the 2022-2023 fiscal year – which ended June 30, 2023.
That was in September 2023. Nearly five months later, the audits still have not been produced.
If something ugly or untoward is in there, it will come out….eventually.
Trying to hide it with, oh, I dunno, absurd posturing re: contract negotiation is a tactic, but I wouldn’t count on papering over malfeasance or poor financial management, if that’s what’s going on.
There is more I didn’t quote, but four audits not yet released… well. It might be smarter to just resign and walk away. Brazening it out isn’t working so well for other people getting caught out lately, who are finding out that oh, wait, you really expected us to be transparent? What?
Some Chicago Financial Facts
I mentioned I was done not beating up on Chicago. When Truth in Accounting put out their State of the Cities for 2024, I used the worst city, New York City, as my example.
Let’s look at what they had to say about Chicago, which was truly the Second City here:
The text:
(74) CHICAGO attributed much of its financial condition to COVID-19. It was mentioned 27 times in the city's financial report. While the city received $2.2 billion in grant funds, its pension liability increased by $1.7 billion, with the pension funds’ investments reporting an unrealized loss of more than 10%. The city had set aside only 22 cents for every dollar of promised pension benefits and no money for promised retiree health care benefits.
The Municipal Employees’ and Officers’ Annuity and Benefit Fund’s actuaries emphasized, “Due to the low funded ratio and the timing of employer contributions, the Plan is at risk of having to liquidate invested assets at inopportune times to pay monthly benefits. The Plan is still at risk of potential insolvency if an economic recession or investment market downturn were to occur in the near term. If the Plan becomes insolvent, the employer will be required to make contributions on a ‘pay as you go’ basis, which means the employer would have to pay all benefits as they become due.”
MEABF is particularly nasty in its set-up, and as I’ve written many times, it’s been on the brink of falling into pay-as-it-goes status.
Chicago Teachers Pension Fund Trends
The Chicago Teachers Pension is not that bad:
Funded Ratio Trend for Chicago Teachers Fund
Contribution Trend for Chicago Teachers Fund
So as far as it goes, the Chicago Teachers pension is not about to fall into insolvency.
However, it’s been just under 50% funded for some years, and this is not exactly healthy, now is it?
Putting more strain on the sponsor of the pension plan doesn’t seem like a wise plan.
Back to “Negotiation” and Chicago
In my subtitle, I referred to BATNA, which means “Best Alternative to Negotiated Agreement”.
But let’s think through who is negotiating, what the options are, etc.
We’ve got Brandon Johnson, the mayor of Chicago, who is very progressive, and who would seem to be on the CTU leader’s side.
And we’ve got the fiscal reality of Chicago.
In my old 2023 post:
I noted that Brandon Johnson had been a CTU organizer when he got his start in 2011. Huh.
Do you think he will be a steely-eyed negotiator with the CTU?
Too Bad Both Chicago and Illinois are Limited
So here’s the reality for all the big talk from both the CTU and Brandon Johnson.
I pointed that out here:
Brandon Johnson has noticed the bite already. He would love to cooperate with the CTU. But he can’t.
Because he has figured out the trap he has been caught in, trying to figure out how to deal with contributions to city pensions.
Contributions that have to be made due to state constitutional provisions from 1970, from before he was born.
May 2015: Illinois Pensions: How Did We Get Here? The 1970 Constitution
SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
So, Brandon Johnson (born 1976), Stacy Davis Gates (also born 1976), and my other fellow Gen-X-ers (I was born 1974) — I recommend focusing on amending that 1970 Illinois State Constitution first if you want other goodies for your union members now.
Or maybe you might want to focus on your grave pension issue.
Because it is constraining every other benefit you could negotiate for your members, including current pay.