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(Reuters) — An Illinois House committee Tuesday approved a bill that would give the cash-strapped Chicago Public Schools an extra 40 days to make a $634 million payment to its pension fund.
The Democrat-controlled House Executive Committee voted 8-2 to send the measure, which pushes the payment deadline to Aug. 10, to the House floor.
Jesse Ruiz, interim chief executive officer of the nation's third-largest public school system, said more time was needed to get a permanent solution to escalating pension costs that are consuming money needed for educational purposes.
"We simply can't get this done by June 30," Mr. Ruiz told the committee.
Bukola Bello, a lobbyist for the Chicago Teachers' Pension Fund, said the fund's board was neutral on the bill, trusting that the full payment will be made. She added the fund would have to liquidate $100 million in assets to deal with a late CPS payment.
Chicago Teachers Union spokeswoman Stephanie Gadlin called the bill "a mini pension holiday" that she compared to "putting a tiny piece of gauze on a hemorrhaging wound." The union's contract with CPS expires on June 30.
The school system is facing a $1.1 billion deficit in its upcoming fiscal 2016 budget, which has been delayed due to a state budget impasse.
On Wednesday, the Chicago Board of Education will take up a proposal to issue as much as $1.13 billion of tax anticipation warrants and notes for cash-flow needs in the current and next fiscal years.
(Reuters) — Chicago's $20 billion unfunded public pension liability is on track to grow significantly regardless of the outcomes of litigation over the constitutionality of benefit cuts or legislative action, Moody's Investors Service said on Friday.