Chicago Teachers Pension Fund Trustee Alleges Mismanagement
Chicago Teachers’ Pension Fund (CTPF) Trustee Maria J. Rodriguez is requesting outside counsel because she said she is being threatened after she raised concerns about mismanagement at the fund.
“I’m requesting independent counsel due to mismanagement concerns of the fund and due to threats made against me,” Rodriguez said at the March 21, 2024 board meeting. “It needs to be addressed. Not everybody knows what goes on behind closed doors, but when it came to a threat, I don’t take threats.”
“I think you’re delving too far, but thank you,” President Blackwell said.
The meeting then adjourned.
Rodriguez has been a vocal critic at the pension board meetings, often voting no on motions and expenditure requests while most trustees vote in favor. She is the only trustee elected as an independent.
President Blackwell battled Rodriguez and two other trustees a few years ago after he alleged there was racism and intimidation and then got the board to censor Rodriguez and former Trustees Tina Padilla and Gervaise Clay. Retired Teacher Trustee Mary Sharon Reilly was reprimanded for making racist statements.
The three trustees who were censored would ask many questions that appeared to irritate Blackwell. Blackwell also alleged that the Chicago Teachers Union was pressuring the Fund to hire former Speaker Mike Madigan people. Madigan was indicted and is awaiting trial for massive corruption while he served as the Speaker of the House.
Rodriguez pushed the Trustees to vote for a forensic audit almost four years ago. However, the CTPF board has not yet revealed findings of the audit.
Teachers in Ohio and Minnesota have hired an outside auditor to conduct forensic audits of their pension funds because of funding problems.
The Ohio state auditor concluded after the audit that the fund could have doubled its funding (from $90 billion to $180 billion) had it been better managed. Instead of raining in secret and high fees from Wall Street managers, the Ohio State Teachers Pension Fund cut retired teachers' Cost of Living Adjustment for seven years, resulting in the loss of 30 percent of their pension’s purchasing power.
In Minnesota a group of teachers hired Ted Siedle, a former SEC attorney who is considered the nation’s leading public pension fund investigator, because of their concerns about their Two Tier pension system. A majority of Chicago teachers are also under the Tier 2 Pension Law in which they need to work 10 years and cannot retire until the age of 67 without penalty.
Rodriguez said she has concerns with the CTPF budget and its expenditures on conferences and staff compensation as well as excessive money manager fees. When she asks questions regarding staff conferences, the Executive Director tells her to refer to the budget. The problem, she said, is the budget is very vague.
Rodriguez has also questioned procedures being properly followed at the Fund. For example, the Fund had explored investing in the controversial Lincoln Yards development, but never took a vote when they decided against it.
“The funding ratio is so low,” Rodriguez said. “When I ask for transparency, I’m not always allowed to speak.”
CTPF funding has dropped from almost 100 percent funded 25 years ago to 47 percent funded today.
Rodriguez has been a trustee for 19 years. She first served on the United Progressive Caucus ticket before turning independent after CORE won in 2010 to lead the Chicago Teachers Union. She said in the past trustees always looked over the budget carefully before voting, unlike today when it is rushed through with little input.
“There is much less transparency with the budget,” Rodriguez said. “It’s take it or leave it.”
Rodriguez is not the only person questioning the management of the Chicago Teachers Pension Fund. A former employee is suing the fund for mismanagement and his case is still in litigation.
At the October 15, 2020 Board meeting the trustees voted for a forensic audit of the Fund. On March 6, 2021, the pension publicly announced it had entered into a contract with BDO.
Siedle wrote a letter to the Chicago Teachers Pension Fund after the audit was announced.
“Will the investigation by BDO include a review for conflicts of interest, fiduciary breaches, hidden and excessive fees, and potential violations of law related to the investment portfolio? When will the investigation be completed? Will the investigative findings be made public for pension stakeholders to scrutinize?”
He said CTPF contradicted itself when it responded that the Fund “is a public body and operates transparently,” but could not answer his questions because “the scope of the audit is currently confidential.”
After Siedle asked for a copy of the BDO contract, the Fund’s Chief Legal Officer Daniel Hurtado wrote that the pension will produce only a redacted copy of the agreement because of “trade secrets.”
“Public pensions, which are funded by taxpayers and state workers, are supposed to be the most transparent of all pensions,” Siedle wrote. “State Freedom of Information Acts are supposed to ensure public scrutiny of these trillions of public monies.”
Siedle has investigated over a $1 trillion in public pension fund money that have revealed widespread investment abuses including mismanagement of investments and related malfeasance which “is the leading cause of pension underfunding.”
Chris Tobe is a former trustee of the Kentucky Retirement System who was a whistleblower after he wrote a letter to the SEC documenting corruption at the fund.
“This has to do mostly with Investment corruption and Maria has been a sole voice of independence and transparency in a sea of corruption,” Tobe wrote in an email.
He completed a forensic audit of the Chicago Police Pension in August 2021 and found rampant investment problems. All 5 Chicago Municipal Pensions have a lot of similarity in their investment corruption, he said.
“My report was mostly covered up by the Chicago media,” Tobe said. “I think Maria is understating the problems. I think the corruption is overwhelming and no independent counsel or audit will be allowed.”