JOHNSON CLAIM: Paul Vallas underfunded teacher pensions, resulting in higher property taxes.
Johnson repeatedly blamed Paul Vallas for property tax increases tied to underfunded pension obligations to city workers. Families, Johnson said, are “burdened by the property tax burden that was created in the 1990s by Paul Vallas—a $2.5 billion tax bill that the city of Chicago has had to inherit because of the failures of the ’90s.”
Host Mary Ann Ahern also noted that Vallas stopped funding the city’s teacher pensions when he was the CEO of the Chicago Public Schools. Asked by Ahern whether he takes responsibility for the current CPS pension crisis, Vallas said he didn’t, and blamed a pension holiday “in 2009 [or] 2010” for the shortfalls.
PARTLY TRUE: In 1995, the Republican-controlled state legislature passed a law that allowed the school district to redirect tax revenues that had previously been exclusively dedicated to the teachers pension fund, and use them for its general education fund instead. With the new law, Vallas balanced CPS budgets in part by skipping pension-fund payments.
The Tribune noted that the pension fund “was still sound” when Vallas left the district in 2001. But the CPS pension holiday lasted until 2006, during which time more than $1.5 billion was diverted from the fund. When the holiday expired, the teachers pension fund was underfunded by more than $3 billion.
In 2016, then-Mayor Rahm Emanuel instituted the largest property tax hike in Chicago history. Emanuel phased in property tax increases of $543 million over four years, and said at the time it was specifically to cover underfunded city-worker pensions (including massive shortfalls in police and firefighter pension funds). In Emanuel’s 2016 budget address, he said:
“The bottom line is that past leaders negotiated a benefit package for city workers without providing the necessary government funding and employee contributions. For decades, the state permitted – and the city funded — the bare minimum required. And then the State changed the law in 2010 and established a new responsibility for the City. Now the bill has come due.”
When Vallas announced his intention to run for mayor in the 2019 election, Emanuel said Vallas had “planted the seeds” of the pension crisis.