Thursday, June 23, 2022

Pension Pauses Audit

Chicago Teachers Pension Fund Votes Down Forensic Audit

By Jim Vail


Pension Fund Trustee Tina Padilla 

Chicago Teachers Pension Fund (CTPF) trustees voted down a forensic audit at the June 16, 2022 board meeting.

CORE and Members First Trustees voted against the forensic audit that would have taken a closer look at the $13 billion fund and any spending irregularities. Teacher Trustee Tina Padilla with the REAL Caucus and Retired Teacher Trustee Maria J. Rodriguez, an independent who introduced the motion, were the only two who voted in favor of the audit.

"Are we going to be fiduciary delinquent?" Trustee Padilla asked during the vote. "It should be investigated. I don't want to be delinquent."

A forensic audit can seek answers to longstanding trustee questions regarding potential conflicts of interest, fiduciary breaches and violations of law regarding its investments, said Edward Siedle, a pension expert.

Siedle wrote in an article entitled "Questions Surround Chicago Teachers Pension Fund Long, Long Overdue Forensic Audit," that it was a mystery why public pension funds were so reluctant to find out if they could be hurt by investment consultants' conflicted loyalties, which is a big concern in the industry.

A SEC investigation revealed that pension consultant conflicts of interest involving Wall Street money managers paying consultants to recommend them to pensions was pervasive and resulted in significant financial harm. 

Siedle who audits pension funds said teachers should know how safe their pension money is when it is only 45 percent funded. 

"Since the Government Accountability Office has estimated investment conflicts can result in 1.3 percent lower returns, the harm to the $13 billion pension from this single form of industry wrongdoing alone may amount to nearly $170 million per year over time and may exceed $3 billion," he wrote.

Siedle said the CTPF spokesperson refused to answer his following questions: would a BDO audit review conflicts of interest, fiduciary breaches, hidden and excessive fees and potential violations of law related to the investment portfolio. The CTPF spokesperson said the audit was "confidential." A lawyer for the fund said there are trade secrets which could cause competitive harm to a person or business. 

The CTPF had earlier voted for the first part of a 2 part phase of a forensic audit. CPS Board Trustee Dwayne Truss suggested scheduling another meeting to discuss the audit. Some stated they were worried about the cost of the audit.

A trustee said there will be a special meeting in July to further discuss the forensic audit.

Siedle said his audits were made public and revealed a lot of missing money. "Pension stakeholders deserve to know."

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Saturday, June 4, 2022

HOD June

House of Delegates June 1, 2022 Report

By George Milkowski 


Note:  you may find the last paragraph at the very end of my report of special interest.  I pulled a few selected items from our list of political contributions from April 1, 2021 through March 31, 2022.  None of this money is from dues, which is prohibited by law.  Instead. It comes from voluntary contributions from members


The meeting began at 4:34 p.m. and was a Zoom webinar.


I. Officers Reports

A.   Christel Williams- Hayes – Recording Secretary.  Christel said the CTU has received reports that PSRPs are having their pay docked.  There is no cause for this and any PSRP needs to contact the school delegate and their Field Rep if this takes place.

B.  Kathy Catalano – Financial Report.  Kathy reported we are now nine months into our fiscal year and revenues are about $338,000 in the black.  With more dues coming in next month the CTU expects to have a surplus of about $500,000; maybe even going up to $750,000!  Dues are based on a particular lane and step from the teachers’ salary schedule and the CTU expects to have an additional $1 million for next year’s budget.  Also, there will be no Union election next year that cost over $300,000.

C. Maria Moreno – Financial Secretary – Our membership has gone up to 28,313 and retiree membership has increased by 12 to 1,664. 

Our recent election had a 63% participation rate which is far beyond the rate in New York City (20%) where they vote by mail and of our own CTPF which had a rate of a paltry 13%.

In the election Stacy Davis Gates won the presidency with 56.9% of the vote.  Esposito-Usterbowski received 26,46 % and Dowd got 16.6% of the vote.

There is a runoff for two clinician functional vice presidents as no one received more than 50% of the vote.  Ballots were mailed to clinicians on May 26 and are due back by June 10.

D.  Chris Baehrend – Charter Division – Chris reported that the May 17 demonstration by the charter school division of the Union was successful.  They are in multi-employer negotiations and he said that what gains the charter division gets can help lead to similar gains for all CTU members in future negotiations.

Chris is stepping down as the head of the CTU’s charter division.  He decided not to run for re-election.

E.  Stacy Davis Gates - Vice President – Stacy said that COVID is not over and the CTU is working on strengthening member actions through school safety committees, Stacy also said the “We Care Mentoring” program for teachers with less than four years of experience has been a success.  The program mentored 300 teachers in the last two years with a positive retention rate.  There are hopes to increase that number to 500 for the next school year. Veteran teachers who would like to be mentors may apply for those positions and there will be a stipend provided.


II. President’s Report

Pres. Sharkey said that his term ends at the end of June and leaving to return to the classroom is bittersweet.  Some critics have called him undemocratic but he maintains the CTU tries to be open and transparent with often vigorous debates in the House of Delegates.  He said the current election with three slates of candidates is a good thing as issues and concerns of the membership may be presented and debated and then the members decide the direction the Union should go.

Jesse said the budget cuts in the schools need to be opposed.  In the last two weeks the CPS agreed to pay $175 million to the Municipal Workers fund, which is just a rationale for more cuts.  While many CPS paraprofessionals are covered by the Muni Fund, State law says it is the responsibility of the City, not the CPS, to make these payments.  Lightfoot has been getting her school board to help her cover City expenditures at the expense of the children.  

The CPS STILL is sitting on federal COVID relief funds and refuses to use them for programs in the schools.  The final CPS budget will be voted on in July and cuts need to be fought.  He also feels an economic recession is coming and that will put more strain on the CPS budget.  We need to be prepared to fight any additional cuts.

III. Items for Action

A.  The CTU budget for 2022-23 was presented.  It calls for expenditures of $18,020,00.  Mary Ann Esposito-Usterbowski asked about the “pass throughs” to the IFT and AFT.  Our constitution requires that we make these payments and the AFT and IFT are expected to increase the amount of ”pass throughs” they receive at their upcoming conventions.  A little over half of our expenses go to these organizations, but a chunk of it comes back to the CTU when we have state or federal legal actions and when we participate in sanctioned meetings and so on with those organizations.

A delegate asked if more money should be spent on member defense.  Jesse said that most of our expenses are for that already through the work of our field representatives and legal team.  

Frank McDonald (Washington High) asked if the CTU could install solar panels on the roof of the buildings.  Jesse said that that has been suggested in the past and the CTU will look into it.  Installation of solar panels can be expensive and doing so would depend, in part, on existing tax rebate laws from the State and the U.S. governments.

The budget was approved 91-9%.  I voted “yes”.

B.  Kurt Hilgendorf presented five additional names for endorsement in the June primary.  He said mailers will be going out to all members in the next week or so.  Margo Murray asked why we haven’t endorsed Gov. Pritzker?  Kurt said he is running unopposed and he hasn’t been able to meet with the endorsement committee but is expected to do so before the November election.

Terra S. asked why all endorse candidates are Democrats.  Are there any independents?  Kurt replied that independents need to request to be considered for endorsements.  He added that the Union also is the primary funder of United Working Families in Chicago that encourages independents to run for office.

A motion to close debate, which I opposed. passed 96-4% and the endorsements were approved 85-15%.  I voted “yes” on the endorsements.

C.  A resolution honoring Chris Baehrend for his work with building the CTU’s charter division passed 94-6%.  I voted “yes”.

D.  A resolution honoring Jesse Sharkey passed 97-3%.  I voted “yes”.


IV. Committee Reports

A.  Organizing – Jim Cavallero – Parents and the CTU from at least eight schools have been active in fighting the CPS’s budget cuts and at least $24 million in planned cuts have been rescinded.

The CTU plans to be in the Puerto Rican People’s Parade on June 12 and the Pride Parade on June 26.

B. Grievance – Jim Staros – Over 300 new positions opened up this year due to our contract agreement for a Joint CTU/CPS class size committee.

The CPS agreed to have an additional $5 million for more Cadre Subs and $2 million more for incentives for day-to-day subs.

C.  Subs of the Month – Georgia Waller – The Union presented a short video honoring all recognized outstanding subs from the past year.

D. Political/Legislative – Kurt Hilgendorf – Kurt reported that the bill to allow retirees to sub up to 140 days in the 2022-23 and 2023-24 school years with no reduction in their pension benefits has not yet been signed, but he expects the governor to do so by the end of the month.

Kurt also mentioned that thanks to our political activism with the IFT, the Illinois State Board of Education has backed off on its plans to have students tested three times during the school year.  It will stick with just one required test.  

Kurt reminded the assembly that early voting for the June 28 primary had begun.  He also said that in-Ward early voting begins June 13 and a voter can go to any in-Ward site to vote no matter where in the City we live.


V. New Business/Question and Answers

Anita Hill asked what is the source of revenue for “interventionist schools”?  The CTU doesn’t know but will look into it.

Christen Chapman motioned that the CTU participate in a local event against gun violence on June 11,which part of a national event.  The motion passed 97-3%.  I voted “yes”.

Margaret West expressed her hope that when in-person House meetings resume that they will be shorter.

Natasha Carlson said that a parent who had been banned from her school entered anyway and was removed without incident, but the school is now setting up a security committee.  She questioned whether she, as a delegate, should get involved on that committee.  Jesse said that it would probably best to instead go through the PPC and the school safety committee.

A motioned to extend debate failed 19-81%.  I voted to extend debate as I always do.

The meeting ended at 7:32 p.m..


These are the largest donations for that time period.  The CTU gave $59,900 to State Senate President Don Harmon, three separate donations to Delia Ramirez totaling $118,800 and $59,900 to United Working Families.

To be fair, there were a number of important laws that we favored that came from Springfield this past year including restoration of our full bargaining rights, an elected school board, and restoration of the required school tax levy to go to the pension fund.  Harmon and Ramirez were strong supporters of these measures and now Ramirez is running for a seat in the U.S. House of Representatives.