Quick Hit Ellyn Fortino Thursday September 19th, 2013, 4:58pm

Chicago Teachers' Pension Fund Calls On UNO To Pay Its Fair Share

The Chicago Teachers’ Pension Fund (CTPF) announced Monday that the United Neighborhood Organization (UNO) charter school system has not made pension contributions for 90 of its certified teachers, according to an audit by the independent accounting firm KPMG.

UNO, however, says the number is far less than that.

Officials from the UNO system, CTPF’s second-largest employer with more than 700 teachers and administrators, acknowledged that 20 to 25 teachers were not reported to the fund due to "natural errors," like not knowing if an employee is certified. Phil Mullins, UNO's chief strategy officer, told Progress Illinois that when dealing with more than 700 employees, the list of who is or isn't certified changes frequently. 

Jay C. Rehak, president of the CTPF's Board of Trustees, said he was "puzzled" by the fact that there were any unaccounted employees. But added that he's "happy that we're moving towards getting people in the pension fund who should have been in the pension fund in the first place." 

In a Monday interview with the Chicago Tribune, UNO's CEO Juan Rangel blasted the review, saying "Their numbers are wrong because they're counting people that just don't qualify." UNO officials say most of the educators in question are either part-time or substitute teachers, and therefore the charter system isn't required to take out pension contributions on their behalf. 

Mullins stressed that there's no incentive for UNO not to report its full-time certified employees to the fund, and added that correcting any such errors also costs UNO a lot of time and money. 

"We have no reason not to have people contributing," he said. "The more they contribute, the more beneficial it is to the organization." 

In his interview this week with the Chicago Tribune, Rangel took another jab at those who govern the fund, saying UNO feels "suspicious" that they released the review on Monday, the same day its newest school opened.

The school Rangel referred to is the UNO Soccer Academy High School on the Southwest Side. The academy was one of the network's new schools that saw construction delayed after Gov. Pat Quinn temporarily turned off the money spigot in April for a $98 million state grant as a result of insider deals. Companies owned by two brothers of Miguel d’Escoto, who was UNO's second top executive at the time, received contrats worth millions of dollars from the grant for state-funded school construction projects in Chicago. D'Escoto quit eight days after the Chicago Sun-Times first broke the story in early February.

Quinn restored the funding for the UNO Soccer Academy High School in June after UNO changed up its board and vowed to reform the way it had operated. UNO also brought in the Illinois Facilities Fund to oversee the remaining construction needs of the new high school. Two UNO board members reappointed after the May shakeup, however, have recently resigned.

Rehak stressed that CTPF only has one agenda: "We're trying to make sure that we collect every dollar that’s owed to us and not one dollar more."

The recent audit of UNO is part of CTPF's larger review of charter schools to make sure unaccounted employees get into the fund. The new audits stem from a preliminary examination of charter school employers CTPF conducted late last year that found a "lack of consistent reporting and irregularities."

Overall, 108 CPS charter school employers contribute to CTPF, and Rehak said a second large employer, the Noble Network of Charter Schools, will be audited next.  

"The problem is people just want to say, 'Oh, (teachers) didn’t get in. Too bad for them.' It doesn’t work like that," Rehak said. "Those people can come back in 20 years and say, 'Where's my pension?'"

In those instances, the Chicago Public Schools (CPS) and CTPF would be on the hook for the pensions, he said. And if teachers haven't been making their contributions, they would also have to make retroactive payments into the plan.

Going forward, Rehak said a new state law that took effect August 16 should help curb some of the underreporting by employers, while also protecting charter employees. The law, Public Act 098-0427, imposes a penalty for late contributions to the fund, allows for interest charges to be placed on late payments, and requires each charter school to designate a pension officer to certify payroll information and contributions that are due to the fund.

It's important to note that there has been a long history of nonpayments to the fund by certain employers. As such, CTPF has made it a point to make sure employers are not skipping payments and are contributing their fair share.

CPS' reduced or skipped payments to the fund is the primary cause of CTPF's chronic underfunding over the past two decades, according to the Center for Tax and Budget Accountability's analysis of the CPS' proposed fiscal year 2014 budget. CTPF was 96 percent funded in 2002, but it was only 60 percent funded in 2011 due to years of neglect by CPS and the Illinois General Assembly, according to the analysis. By the end of its 2012 fiscal year, the plan was just 53.9 percent funded. CPS' pension holidays allowed by the Illinois General Assembly have specifically resulted in a $3.2 billion loss in revenue since 1995. 

Rehak said he hopes the recent audit will help "tighten up any misunderstanding" about how serious it is to not fully report an employee's payment to the pension fund.

"The law is clear," he stressed. "If you're a certified teacher working for a charter school, you must be in the pension fund. There is no option."

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