Chicago grapples with $175M CPS pension payment

by / ⠀News / March 28, 2025

Chicago Public Schools (CPS) is facing a $175 million pension payment for non-teaching staff. This has caused a dispute between city officials, the school board, and Mayor Brandon Johnson’s administration. The conflict is about who is responsible for paying the Municipal Employees’ Annuity and Benefit Fund (MEABF).

Mayor Johnson and former Mayor Lori Lightfoot say CPS should pay, but former CPS CEO Pedro Martinez said it’s the city’s legal responsibility. CPS says it is under financial strain and can’t afford the extra pension costs without federal COVID-19 relief funds and more state education dollars. “Chicago Public Schools officials have been clear for more than a year that CPS, like many districts, is facing a challenging fiscal situation,” a CPS spokesperson said.

City officials warned that if CPS doesn’t pay by March 30, the city may have to use reserves to balance the budget. This could affect the city’s credit ratings. The main concern is for the pension beneficiaries, many former or current CPS employees.

CPS faces pension payment dilemma

Lashawn Wallace, a retired CPS paraprofessional, said workers are entitled to the pensions they’ve earned. The MEABF is only funded at 24% of what’s needed to cover future payments.

It requires increased contributions to reach 90% funding by 2058. The pension payment issue started with a 2020 agreement under Mayor Lightfoot. It shifted some pension costs to CPS as it moved towards an elected school board.

The payments from CPS were small at first but were expected to increase over time, putting more financial pressure on the district. Looking ahead, the payments to the MEABF could reach $315 million by 2027. This could worsen CPS’s financial problems, as it already has a lot of debt from building projects and costs to maintain aging schools.

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Managing a pension system with low funding requires careful planning to meet long-term obligations without causing immediate financial chaos. City officials and CPS must work together to find solutions that ensure stability and fairness for everyone involved.

Image Credits: Photo by Christopher Alvarenga on Unsplash

About The Author

Kimberly Zhang

Editor in Chief of Under30CEO. I have a passion for helping educate the next generation of leaders. MBA from Graduate School of Business. Former tech startup founder. Regular speaker at entrepreneurship conferences and events.

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