CHICAGO (Reuters) - The Chicago Public Schools (CPS) made its full teachers' pension payment on Tuesday ahead of a midnight deadline, saying the move will require $200 million in spending cuts, according to a school official.
Illinois law mandated a $634 million payment to the Chicago Teachers' Pension Fund, but it was uncertain whether the cash-strapped public school system, the nation's third-largest, would find the necessary money.
"As we have said, CPS could not make the payment and keep cuts away from the classroom, so while school will start on time, our classrooms will be impacted," CPS Interim CEO Jesse Ruiz said in a statement.
About 1,400 jobs will be impacted by the cuts starting on Wednesday, according to a school district source.
The Chicago Teachers Union, whose contract with CPS expires at midnight, said it was blindsided by the job cuts.
"These layoffs prove that the (Chicago Board of Education) never intended to make the pension payment in good faith and that they are using this to justify more attacks on our classrooms," union President Karen Lewis said in a statement.
The board approved a $200 million cash-flow borrowing last week that could be tapped for the pension fund.
A Chicago city hall source said Ruiz and Mayor Rahm Emanuel would unveil a comprehensive plan on Wednesday that includes long-term solutions for the city's teacher pensions.
Charles Burbridge, executive director of the Chicago Teachers' Pension Fund, called on policy makers to address school funding "so that teachers do not need to choose between teaching security today and retirement security tomorrow."
"The need for long-term solutions is not erased with this payment," he said
An Illinois Senate committee will take up a bill on Wednesday that would ease the district's escalating pension payments.
The Chicago public school system is struggling with a projected $1.1 billion hole in its next budget due largely to escalating pension payments. Last week, contract talks between the school system and the teachers union broke off, according to a union official.