Chicago Teachers Pension Fund Executive Director Carlton Lenoir made a spectacular speech entitled State of the Fund at the June 20 , 2024 Board meeting in which he outlined all the successes he’s had while heading the Fund for the past three years.
“First of all I want to say I am grateful for the opportunity to represent CTPF as the executive director as many of you know it was a long time career goal and it would not have been possible without this board,” Lenoir stated.
When he started his speech I thought he was planning to resign. Rather he doubled down on all the accomplishments of the Fund under his tenure. Those include taking over an organization that had gone through a ‘tumultuous period’ with inefficient board meetings, high staff turnover and low morale.
At that time the Board voted to censure and reprimand four female trustees under charges of racism and unprofessionalism. A closer look revealed those being targeted were critics who asked questions.
Lenoir said the fund has now entered into a period of stability and transparency. (Former Mayor Rahm Emanuel loved to use that word transparency.)
The highlights of CTPF success include effective management, better communications (transparency), the reconstitution of the internal audit department (which was not operational but now ‘flourishes’), an annual risk assessment, and staff stability that turned a voluntary turnover rate of a high of 18.7 percent in 2021, then fell to 2.1 percent in 2023 and is now zero in 2024.
Wow! An incredible feat in today’s world of acute worker shortages. How the heck did they do it? Well, one way to keep your employees happy is to raise their salaries and allow them to work remotely at home. According to the Great Place to Work survey, 88% of CTPF employees say it is a great place to work.
The MyCTPF portal now serves over 20k users allowing them to eliminate costly mailing of annual member statements.
Unlike the past, CPS now makes regular pension contributions each June, Lenoir said.
“So I take pride in these improvements in our efficient and effective management of these steps that have really set the foundation for all these functions that we do daily on behalf of our members,” the Executive Director said.
Some said they thought this speech was unprecedented in CTPF history.
Lenoir has been under some heat this past year after we reported that he is currently on a Do Not Hire list at the Teachers’ Retirement System of Illinois when he sent members’ information which included social security numbers to his personal email.
He is in a current battle with Retired Teacher Trustee Maria J. Rodriguez who has accused the fund of being mismanaged and requested outside counsel after she said she received threats.
The CTPF Trustees have been mostly supportive of their Executive Director, including President Jeffery Blackwell who wrote a letter in support of Lenoir after his Do Not Hire status was made public. Lenoir said in his defense that his emails were on behalf of the fund and no personal information was leaked to the public. He said it was a racist attack.
But he is still on the Do Not Hire List.
These are tough times for public pension funds across the country.
“After all this wonderful news we have to keep in mind we don’t want to become like the Ohio Teachers because that’s a disaster and it’s been going on for years,” Retired Teacher Trustee Mary Sharon Reilly said. “If you don’t know, look it up and you will see what a nightmare it has been.”
The Ohio State Teachers Retirement System elected a majority of reform trustees that the Governor and legislators are trying to stop from being seated. A group of retired teachers ordered a forensic audit of the fund that revealed that had the fund been better managed, it would have doubled its assets from $90 billion to $180 billion.
Several years ago Ohio eliminated the Cost of Living Adjustment (COLA), meaning teachers’ meager pensions would not keep up with inflation, thus sparking outrage and a fight back.
Illinois has not eliminated the COLA, but implemented the Tier 2 Pension Law that gives state workers including teachers hired after 2011 a far diminished pension. Trustee Rodriguez and others have warned that they may want to eliminate the health care subsidy. She said there are only a few pension funds across the country that offer this subsidy.
“We need to focus on the Tier 2s,” Trustee Reilly said. “How we do it I don’t know. You can thank Mayor Daley in 1995 and what he did to us because it was so unjust he should be in jail for that.”
Lenoir said they are nearing the completion of the Fund’s first forensic audit conducted by an accounting firm with qualified and impartial accountants.
“The audit will be shared with the board and the public in another demonstration of our commitment to transparency and improvement and I expect that this will provide peace of mind to our trustees and our members,” he said.
A motion for a forensic audit was made in 2019 by Trustee Rodriguez and passed by the trustees. Former SEC Attorney Ted Siedle who wrote the book Who Stole My Pension and is the leading forensic auditor of public pension funds has written articles questioning if Chicago would ever conduct an audit.
Lenoir further waxed eloquent on how CTPF has restructured its auditing of charter schools which will save the Fund hundreds of thousands of dollars, they are reviewing and reducing money manager fees, they exceeded their investment target by more than 200 basis points, and they lead the nation with 51 percent of the Fund’s portfolio managed by MWBD managers (Minority Women and Disability-Owned Business Enterprises).
Director Lenoir said also in his speech that Trustee meetings are more efficient and CTPF has better relations with the Chicago Board of Education. They now offer meetings in hybrid mode and the meeting videos are posted within 5 days (people complained about having to file FOIA or Freedom of Information Request to access public pension board meetings), and they are educating thousands of members about CTPF benefits and eliminating conflicts of interest.
“So in conclusion I’m proud to say we have transformed our 2021 vision into tangible achievements,” Lenoir said. “We are a well managed fund.”
Trustee Rodriguez asked after the presentation what is the funding level of the Chicago Teachers Pension Fund.
Lenoir said it is 47.2 percent.
Trustee Reilly said when she was the CTPF president from 1993 - 2002 the Fund was 100 percent funded, but the city stopped making contributions.
“It’s unfortunate because that money belongs to us,” she said. “The union was threatened they would (not) get salary increases if they didn’t approve it. They were using the tax dollars that were supposed to go to the pension fund to give salary increases to the teachers.”
In other news, CTPF said it was not realistic to double the death benefit for members from $5k to $10k because they would have to increase employer contributions to fund the increase.
“We have higher priorities, like addressing Tier 2 Safe harbor issues,” Lenoir said.
Those are the questions we need to ask, and we need to investigate. Wall Street and its money managers are not to be trusted with our retirement money. We need to protect it!
It would be interesting to see what would turn up in an audit. What would be even more interesting to see is who is investing this money, what their rates of return are versus expenses and what is their connection to Chicago politicians and union leadership?