8.7% Increase

CTPF Trustees Vote for 8.7% Increase

By Jim Vail

CTPF Director Carlton Lenoir

The Chicago Teachers Pension Fund Trustees voted at the November 17 Board Meeting to increase the fund's employees salaries by 8.7% even though the Fund has been losing money lately.

CTPF Executive Director Lenoir Carlton spoke in favor of the motion made by CORE Trustee Mary Sharon-Reilly and seconded by Members First Trustee Victor Ochoa for the salary increase as part of an agreed Cost of Living Adjustment or COLA because he said it saves the fund money over the long-term.

The Retired Teachers Association President Linda Williams and others argued against the whopping salary increase that reflected the country's high inflation rate this year.

Carlton told Trustees that the Fund had agreed to the COLA increase for its employees in 2019 to reflect the Consumer Price Index and this policy has saved the fund "hundreds of thousands of dollars."

He said the Pension Fund moved to a fixed COLA adjustment in order to make CTPF salaries competitive. 

"Every five years we need to make sure our pay structure is competitive," he said. "And COLA is equivalent to Social Security that provides inflation protection."

Carlton said employees have received about a 1.36% annual COLA increase over the last 10 years. He called the Board's policy "uber conservative" by following an index so that there would be no volatility which has saved the Fund $200,000.

"This has not harmed the fund," he told Trustees, "but has saved the Fund."

Retired Teacher Trustee Lois Nelson who voted against the motion disagreed.

Nelson said this was not prudent because the COLA adjustment was meant for people on social security (some people receive only $1200 a month), and not workers who earn over 100k a year.

"I love our staff, but I think our staff is realistic to see someone making high salaries," she said. "We know they work hard and deserve what they get, but they are cognizant of what is right and what is wrong."

Retired Teacher Trustee Maria J. Rodriguez who also voted against the raise said she is concerned about the pension's long-term viability noting that many teachers are leaving the system and taking their pension contributions with them. She noted that the Municipal Pension Fund (teacher assistants and city workers) did not agree to the 8.7% salary increase this year.

She asked the Executive Director how much the Chicago Teachers Pension Fund is currently funded at. 

Lenior said CTPF funding dropped from $13.1 billion to $11.2 billion today. 

Teacher Trustee Quentin Washington who voted in favor of the salary increase said that this is the policy the CTPF voted on and they shouldn't changed the rules in the middle of the game. 

"Yeah 8.7 percent is high, but so is inflation," he said. "I want the staff to be treated with respect when we say we are going to do something, we do it."

Members First Teacher Trustees Phil Weiss and Victor Ochoa both voted to increase the salaries.

"We're doing things that are right for the staff," Ochoa said. "We need to make sure this doesn't keep getting repeated."

Trustee Rodriguez suggsted an actuarial study be conducted to evaluate the financial impact on the fund if the Fund would continue with a fixed rate.

"Solvency of the fund is the most important," Rodriguez said, who added there was no need to rush the motion. 

Chicago Board of Education Trustee Miguel Del Valle was not present to vote. The other CPS Board Member Dwayne Truss has not been replaced.

The motion passed 7 - 2 to increase the employees salaries 8.7 percent.

A closer look at the Chicago Teachers Pension Fund and its long-term sustainability will be in order as the Fund continues to lose money. Former Executive Director Charles Burbridge doubled the number of employees as well as the number of money managers at the Fund.