CPS Legislation Provides Pension Payment, Levy Increase
June 30, 2016
The other shoe appears ready to drop on the unresolved CPS pension issue. A House amendment to Senate Bill 318 allows the City of Chicago to impose a new property tax levy for Chicago Public Schools (CPS) pensions. The record $580 million property tax levy approved earlier this year by the Chicago City Council addressed, in part, several municipal pension issues but not the CPS pension shortfall.
The legislation provides that a separate tax may be levied by the Chicago Board of Education for the purpose of making an employer contribution to the Public School Teachers' Pension and Retirement Fund of Chicago, at a rate not to exceed 0.383% (estimated to generate about $250 million annually). It requires the proceeds from this separate tax to be paid directly to the Pension Fund, and also states that the Property Tax Extension Limitation Law will not apply to this new rate. The bill also amends the Property Tax Extension Limitation Law in the Property Tax Code to add certain extensions made for making employer contributions to the Chicago Teachers Pension Fund to the list of special purpose extensions that are excluded from the aggregate extension.
A second, companion bill (SB 2822) was also passed by the General Assembly to help address the CPS pension issue.SB 2822 provides for a one-year $215 million “pension parity” payment to be made by the State to CPS. This payment will also be placed under the “continuing appropriations” statute to ensure payment is made in FY17. However, final passage of SB 2822 is conditioned on the legislature passing “pension reform” legislation in the fall veto session (scheduled to begin on November 15). To ensure pension reform is enacted first, a “motion to reconsider” has been filed on SB 2822 in order to “hold” the measure from being sent to the Governor until January 2017.
How does this affect BOMA/Chicago Members? The rate cap of 0.383% will result in a new property tax levy - and property tax increase - of about $250 million dollars, in addition to other levy increases already passed this year by the City Council.