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Chicago Crowd-Out: How Rising Pension Costs Harm Current Teachers—and Students

The Chicago Public School (CPS) system papers over its annual shortfalls by borrowing vast sums from bond markets. As a result, CPS bonds are now rated as “junk.” By failing to make the necessary contributions, the CPS has also, in effect, borrowed from the teachers’ pension fund—and so today, for every dollar of pension contributions, 80 cents goes to pay for benefits that have already been earned and only 20 cents goes to pay for retirement benefits that teachers are earning in today’s classrooms. Reassessing the CPS’s budgetary allotment from state funds, cutting retiree benefits, and allowing the CPS to file for bankruptcy would help solve these problems.

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