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Chicago Public Schools has to pay $669 million to the teachers' pension fund by today, and after that it's not clear how much the district will have left in its budget for day-to-day expenses, the Chicago Tribune reported. CPS has warned investors and aldermen since the beginning of the year that the pension payment will leave the district with a barrel-scraping $24 million — enough cash to cover less than two days of business. But CPS said on Tuesday that its short-term cash picture "modestly improved" after a series of cost-cutting measures in the last school year that included unpaid furlough days and sharp reductions in per-pupil spending. The district, which has threatened drastic cuts in the coming school year without state intervention, said that it would issue a preliminary update to its cash position after making the pension payment today. With its fiscal year ending on the same day the pension payment is due and without a proposed budget for the coming year, CPS will have to get through July with the borrowed money it has on hand until it receives roughly $1.1 billion in property tax revenue due by August.

Daniel Loeb, Paul Singer and dozens of other hedge-fund managers have poured millions of dollars into promoting charter schools in New York City and into groups that want to revamp pension plans for government workers, including teachers, the Wall Street Journal reported today. The leader of the American Federation of Teachers, Randi Weingarten, sees some of the proposals, in particular the pension issue, as an attack on teachers. She also has influence over more than $1 trillion in public-teacher pension plans, many of which traditionally invest in hedge funds. Her union federation is funding a lobbying campaign to eliminate the “carried-interest” tax rate on investment income earned by many money managers. It is trying to defeat legislation that would increase the charitable deduction in New York state for donations to private schools. And it has filed a class-action lawsuit accusing 25 Wall Street firms of violating antitrust law and manipulating Treasury bond prices.

The Pennsylvania Senate on Thursday rejected the pension proposal approved this month by the House, Philly.com reported on Friday. Late last year, the Senate approved a bill to change retirement benefits for future state and public school employees, calling for them to receive both a less generous version of the traditional retirement benefit for current employees as well as a 401(k)-style plan. Under the proposal the House approved this month, new hires would keep the traditional benefit plan for the first $50,000 of their annual salary, with a 401(k)-style plan targeted for anything above that. Pension changes became a key sticking point during last year's historic budget impasse between the legislature and Gov. Tom Wolf. The Democratic Wolf administration and the GOP-led legislature have been working to avoid another stalemate, but neither side has indicated that a deal will occur by this Friday's deadline for a new state budget. Both have key differences to resolve, including how much to spend in the next fiscal year.

Cities and counties are clashing with state legislators over attempts to bolster workers’ wages and benefits, the latest flashpoint in a national dispute over how to address inequality between the highest- and lowest-earning Americans, the Wall Street Journal reported today. So far this year, half a dozen Republican-dominated state legislatures—including in Alabama, Arizona and North Carolina—have passed so-called pre-emption bills that ban Democratic-leaning cities from raising wages and mandating benefits such as sick leave above state or federal minimums. A half-dozen similar measures are pending in statehouses nationwide with more expected later this year. Business groups say that the measures are critical to unwinding a confusing thicket of rules that raise compliance costs and kill jobs. Workers’ advocates say the policies being blocked can decrease employee turnover, boost productivity and support public health.

Local and state governments have a looming pension debt crisis gathering, the likes of which make Puerto Rico’s financial distress seem a minor prelude, according to a Forbes.com commentary. Illinois offers a textbook case of the coming pension fund meltdown with its years-long slow motion fiscal train wreck. On Monday, the Illinois House overrode Gov. Bruce Rauner’s veto of the Chicago police and fire pension bill at the urging of Chicago Mayor Rahm Emanuel. With the Senate’s override vote earlier, the bill becomes law. Without the bill, Mayor Emanuel warned of a “Rauner Tax” — a $300 million property tax hike made necessary by the fiscally-strapped city being unable to borrow $843 million from its pension fund at 7.75 percent to meet current obligations. Gov. Rauner said the veto override would put “an additional $18.6 billion on the backs of taxpayers” warning about “governments (that) fail to promptly fund pension obligations” and kick the can down the road instead of enacting reforms to “grow our economy, create jobs and enable us live up to the promises we’ve made to police and firefighters.” Unfortunately, Illinois is far from alone in this fiscal quagmire, according to the commentary. Top honors for unfunded public pension debt belongs to The Last Frontier State, Alaska, with per capita pension debt, assuming market rate returns, of $38,251, according to the Stanford Institute for Economic Policy Research at Stanford University. Illinois comes in at second, with $28,880 in unfunded pension liabilities per person. Connecticut, California, Massachusetts and New Jersey round out the top six, each having more debt per capita owed to just their pension systems than Puerto Rico owes on its bond debt. Read the full commentary. 

Experts on the April episode of “Eye on Bankruptcy” discussed looming financial crisis in private and public pensions. Click here to watch. 

The Supreme Court will not be deciding whether bankruptcy courts retain power to reject labor contracts after they have expired by their own terms, according to Rochelle’s Daily Wire today. In Hostess Brands Inc., Bankruptcy Judge Robert Drain from White Plains, New York, held in 2012 that the power to terminate a collective bargaining agreement ends when the contract expires, even though labor law requires the company to abide by the expired contract until the National Labor Relations Board declares impasse in negotiations. Judge Drain relied on the language of Section 1113. Focusing instead on the purpose of the statute, the Third Circuit held to the contrary in January and found power to reject an expired union contract in the reorganization of Trump Entertainment Resorts Inc. The union filed a petition for certiorari that the Supreme Court denied on May 31, likely because the Third Circuit was the first court of appeals to decide the issue. Read more. 

The Unite Here Local 54 v. Trump Entertainment Resorts Inc. case was a topic of discussion on last week’s “Eye on Bankruptcy” program. Click here to watch. 

One of the nation’s largest multi-employer pension funds said that it is out of ideas for ways to save itself from an impending failure, the Washington Post reported today. After the Treasury Department rejected its Hail Mary proposal, which would have substantially cut benefits for some retirees, the Central States Pension Fund has little choice but to turn to a federal insurance program that is supposed to offer a lifeline to troubled pension funds. But there’s one major problem — that program is expected to run out of money, too. The Pension Benefit Guaranty Corp., which insures private pensions, is dealing with long-standing financial woes with the fund that protects multi-employer pension plans. The program, which some experts say wasn’t really intended to be used, was set up more than four decades ago to serve as a backstop for private-sector pension plans. But it has been relied on more than expected by large plans on unsteady financial footing. The fund’s deterioration could pose a threat to the 10 million people in multi-employer plans who could soon be left without a safety net for their pensions. Although most of those workers and retirees are in plans that are financially healthy, about 1.5 million people — including the Central States members — are in plans that are projected to run out of cash over the next 20 years. In the past few weeks, lawmakers, Central States officials and consumer advocates have called for a legislative solution that would shore up fragile pensions and the struggling insurance fund. Previous efforts to bolster the insurance program have failed, or so far fallen short. For instance, a 2014 law that made it possible for multi-employer pension plans to cut benefits for retirees was meant to alleviate the burden on the PBGC. But now that the Treasury Department has rejected the Central States proposal, which was the first test under the law, the insurance agency is back where it started. Read more. 

The Central State Pension Fund and the overall crisis in private and public pensions was the topic of discussion on the April “Eye on Bankruptcy” program. Click here to watch.