City Council's Budget Committee chair to summon CPS CEO Martinez to explain pension defiance

An influential alderperson demanded Wednesday that Chicago Public Schools CEO Pedro Martinez appear before the City Council to explain why he is refusing to absorb a $175 million pension payment for nonteaching school employees.

Ald. Jason Ervin (28th), Mayor Brandon Johnson’s handpicked Budget Committee chair, said it’s borderline “malfeasance” for Martinez to have pushed through a $9.9 billion school budget that does not include the pension payment that the city absorbed until former Mayor Lori Lightfoot shifted that cost to CPS.

At the time of Lightfoot's shift, Johnson worked as a paid organizer for the Chicago Teachers Union, which sharply criticized the move. Now that Johnson is mayor, he's asking CPS to absorb the pension payment.

The school system, however, had to close its own $505 million deficit this year and find solutions to historical underfunding. That's why Martinez and Johnson's handpicked school board rejected the mayor’s request to take out a short-term, high-interest loan to cover the cost of both the pension payment and a new teachers union contract.

That's one reason the mayor is laying the groundwork to dump Martinez.

Unless the board does an about-face, the city’s 2025 budget shortfall will balloon to $982.4 million and Chicago will end 2024 with a $223 million deficit. That could force the mayor to freeze hiring, cut spending, cancel projects and consider breaking his campaign promise to hold the line on property taxes. Johnson warned last week that “sacrifices will be made.”

Ervin isn't waiting for the mayor to make his move. He plans to turn up the heat on Martinez by summoning him before the Budget Committee to “tell us what the hell he’s thinking."

“The CEO of CPS needs to be held to account for this," said Ervin. "It’s almost to the point of malfeasance that you don’t pay your pension obligation. ... These aren’t our employees. They’re your employees. Pay for 'em.

"This is having a drastic impact on us. ... His decisions are impacting our finances. ... They need to make adjustments in their budget to deal with it."

CPS "put forward a balanced budget that aims to best support our students and staff, building on the District’s academic progress and ongoing work of the past couple of years," a district spokeswoman said in a statement.

"Given our budget challenges, the district worked to identify as many cost savings as possible," the statement continued. "We will continue to work with all our partners to find solutions to our funding challenges so we can best support our students’ continued success."

Headlines about the mayor’s behind-the-scenes maneuvering to oust Martinez over the unprecedented budget rebuke appear to have slowed the momentum to fire Martinez — at least for now.

On Wednesday, Ervin was asked whether he believes the mayor should dump the schools CEO he inherited from Lightfoot.

“Whatever the mayor decides to do with Martinez is up to him. If it were me, I probably would be pushing a little more now," Ervin said.

While CPS employees make up a little more than half of the members of the Municipal Employees Pension Fund, the city had historically paid these pension costs for nonteaching school staff until Lightfoot used $60 million from CPS to chip away at the city's $838 million budget shortfall that year.

That $60 million was more than a third of the $163 million Lightfoot had forwarded to CPS in surplus tax increment financing funds. In subsequent years under Lightfoot, CPS would continue to cover the pension costs — without any help from a TIF surplus.

At the time, Ervin said CPS had to become a "self-sustaining" unit of government and questioned whether the city ever should have paid the pension cost. Those calls for a separation between CPS and city finances grew when Springfield passed the law creating an elected school board for Chicago.

After outlining the city’s $982.4 million shortfall last week, Johnson made it clear he still held out hope for a pension reversal by CPS, noting CPS has absorbed the payment for "the last four years.”

“This is essentially a weaning process that has to get them into a full standing of what other school districts do," the mayor said that day.

“The entanglements that exist within the city government and the Chicago Public Schools are quite complex," Johnson said. "And as we work to disentangle these structures that have been in place for decades now, CPS is going to be treated like every other school district across the state.”

In some important areas, CPS officials argue, the state doesn't treat CPS like other Illinois school districts. For instance, the state covers other municipalities' teacher pensions, but not Chicago's. Those discrepancies are part of the reason CPS and the school board have balked at taking on the disputed pension payment.