CHICAGO, June 30 (Reuters) - The cash-strapped Chicago Public Schools (CPS) said it sent $464 million to its teachers’ pension fund by Friday’s fiscal year-end deadline, leaving an additional $250 million payment to be made in the fall.
“Only CPS has to take hundreds of millions of dollars out of the classroom for teacher pensions, but despite the unfairness of this law, CPS is meeting its obligation to our teachers’ pensions today,” CPS CEO Forrest Claypool said in a statement.
Unlike other Illinois school districts, which are part of a state-wide teachers retirement system subsidized with state dollars, CPS has its own pension fund.
Escalating pension payments have led to drained reserves, debt dependency and junk bond ratings for the nation’s third-largest public school system.
There was no immediate comment from the Chicago Teachers’ Pension Fund. The retirement system was due $733.2 million this fiscal year and CPS had paid only about $19 million prior to Friday. The district said it plans to make the remaining $250 million payment with a fall infusion of property taxes.
Earlier this week, the district completed a $387 million short-term loan with J.P. Morgan at initial interest rates as high as 6.41 percent to help cover the pension payment.
CPS has been scrambling to shore up its already-meager cash flow after Illinois Governor Bruce Rauner vetoed a one-time $215 million state cash infusion for pensions. Illinois’ ongoing budget impasse has also delayed state grant payments covering transportation and other services at CPS.
Reporting by Karen Pierog; Editing by Matthew Lewis