Day Of Reckoning: Chicago Is Tackling The Worst Pension Crisis In The US
Since the start of this school year, Annie Stoball has been walking her nine-year-old granddaughter Kayla across four blocks to Gresham Elementary on Chicago’s South Side. The route takes the pair through turf claimed by rival gangs – a far more dangerous journey than to her old school, Morgan Elementary, just across the street from their house. So far this “safe passage” trip – the city has hired monitors to watch over the children – has been uneventful.
“Kayla feels safe because I walk her to school every morning and I pick her up when it’s done. My concern is how long they’ll stay out here,” she says, referring to the safety workers.
Morgan was one of about 50 elementary schools forced to close this year, collateral damage from the ballooning pension crises in Chicago and the state of Illinois. The budget gap in Chicago’s school district alone is $1bn, mainly because of pension liabilities, while the combined unfunded pension liabilities of the city and the school district runs to over $27bn.
Rahm Emanuel, Chicago’s Democratic mayor, has said the school closures – along with 3,000 job cuts in the school system – were necessary to close the yawning hole in the district budget. The episode has further soured the mayor’s relations with the teachers union, which held a seven-day strike last year. Karen Lewis, head of the union, called the school closures “racist” and “classist”.
The woes of the city and the state of Illinois – which has its own, worst-in-the-nation, $100bn unfunded pension liability – have been driven primarily by the government’s failure to pay its share to keep its pension promises.
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