Chicago Public Schools hits taxpayers twice with pension pickups

Chicago Public Schools teachers hired before 2017 only pay 2% of the required employee contribution for their pensions. The other 7% is picked up by the district, costing $135 million in 2025.

Most workers are responsible for saving for their own retirement, but Chicago Public Schools has an unusual shift of that burden from employees to taxpayers.

By law, teachers in the Chicago Teachers’ Pension Fund must contribute 9% of their salary toward their pensions. But since 1981, teachers hired before 2017 only pay 2% and Chicago Public Schools pays the other 7% of what the teachers are supposed to be paying: a deal known as a “pension pickup.”

That pickup comes at a steep cost. In fiscal year 2025, the district will spend nearly $135 million covering pension contributions that teachers were supposed to pay themselves.

Chicago public schools stopped offering this perk to new employees in 2017 but continues to fund it for those hired before that date. They also didn’t eliminate the cost. Instead, they gave those newer “Tier 2” employees a 7% pay increase to offset the lost pickup benefit, which an estimate shows is costing taxpayers $68 million in the current fiscal year.

Combined, the pension pickups and related salary increases add up to more than $203 million in extra costs to be paid by taxpayers.

And that’s on top of the growing bill taxpayers face for pension costs. Chicagoans already fund Chicago Public Schools’ employer pension contributions through their property taxes. They’re also responsible for the state’s five other pension systems, which consume nearly 20% of the state budget each year and are still $144 billion in the hole.

The fact that taxpayers fund a defined benefit pension plan with good benefits should be enough. Employee contributions exist for a reason, and the concept of picking them up, even for only employees hired before 2017, is unsustainable.

CPS should pursue phasing out pension pickups for the teachers who receive them, and Illinois lawmakers should pursue the constitutional reforms needed to make further systemic pension reforms. Asking employees to pay their fair share would save taxpayers hundreds of millions of dollars each year.

Until then, Chicago taxpayers will keep paying twice for this exorbitant perk.