Leaked video shows Brandon Johnson faced allegations of 'hiding' $8M in Chicago Teachers Union funds

“You think it’s worth me hiding $8 million from thousands of members? To put my own family at risk for that?"

Chicago Mayor Brandon Johnson faced allegations that he hid millions of dollars from members of the Chicago Teachers Union while working for the union, video footage obtained by The Last Ward shows.

The recording surfaces as CTU fights a lawsuit brought by its own members demanding access to the union’s annual financial audits, which leadership has refused to share since 2020.

“You had a Black woman and a Black man, myself, who were running the political department,” Johnson said in response to members’ questions about the union’s financial reporting. “Don’t you think if we had done anything illegal, don’t you think that there are forces that would love to destroy and tear us down?“

He then spoke directly to allegations of misappropriating $8 million in CTU funds.

“You think it’s worth me hiding $8 million from thousands of members? To put my own family at risk for that? I wouldn’t do that,” he said.

“And don’t think if I did do something like that, [that] folks wouldn’t come to try to figure out how to take me down.”

Recorded just days before the union’s internal election in May 2022, the video shows Johnson on Zoom speaking to CTU members at Morgan Park High School as part of a campaign event for the union’s Caucus of Rank-and-File Educators, or CORE.

Stacy Davis Gates and Jackson Potter were running for president and vice president of the union, respectively, on the CORE slate. They faced opposition from two competing caucuses: Members First and REAL.

By stumping for CORE, Johnson may have violated the union’s own campaign rules governing officer elections.

At the time of the event, Johnson was employed as a CTU “legislative coordinator” and serving as a Cook County commissioner. But the union’s election rules say CTU can’t use internal resources to promote any candidate for union office.¹ And that violating this rule can be grounds for disqualification.

It wouldn’t have been the first time CORE leadership ignored the union’s rulebook.

Where are the audits?

Union rules clearly state CTU must produce an audit for members every year. Specifically, the CTU financial secretary is required by union bylaws to “furnish an audited report of the Union which shall be printed in the Union’s publication.”

But Gates and Potter have refused to do that since 2020, so members filed a lawsuit. The union then filed a motion to dismiss that lawsuit, and a Cook County judge denied the motion.

CTU Political Director Kurt Hilgendorf said in September 2023 that the audits were “just not quite done yet.” Nearly two years later, the audits still have not been produced. Gates personally attacked a member who questioned her about the issue, labeling the call for the release of the required audits a racist “dog whistle.”

Represented by the nonprofit Liberty Justice Center, the plaintiffs’ demands are simple and reasonable: let members review the full audits, commit to sharing the audits in the future, and set a deadline for completing the 2024 audit. Gates and Potter could easily resolve the case, which is hurting the union’s standing with Chicago voters, by complying with those demands. But they have so far refused.

The mayor should call for CTU to resolve the lawsuit immediately – both for the sake of members who deserve transparency and to clear his own name.

Beyond the union audit controversy, Johnson is experiencing bookkeeping troubles in his own campaign fund. The Chicago Sun-Times reported last week that a former aide was improperly listed as Johnson’s campaign treasurer for two years. The chairperson of that campaign committee is CTU employee and Cook County Commissioner Tara Stamps. After reporters in February raised questions about potential conflicts of interest, she said she was stepping down. But she remains the chair today.

“I have no comment and any further inquiry would be you being rude,” Stamps told Sun-Times Investigative Reporter Robert Herguth.

Pension sweetener author speaks out

Illinois Gov. JB Pritzker’s signing of the Chicago pension sweetener bill last week spurred substantial news coverage and a troubling report from S&P.

But there was shockingly little public debate and scrutiny of the bill before it passed. And the governor has not released his evaluation of the bill. So it came as a surprise Friday that the bill’s author felt compelled to offer something of an explanation.

State Sen. Robert Martwick’s statement was published in full on Rich Miller’s Capitol Fax blog. It is pasted below, with rebuttals in the footnotes.

Rich,

Much hyperbole has been written about the recent Chicago police and fire pension legislation signed by Gov. Pritzker. I thought I’d send a quick note to help clear up the misinformation and provide some context.

1. Tier 2 pension benefits for public sector employees do not meet the federal requirements under the “safe harbor” provision. This is universally accepted as fact.²

2. Failure to meet safe harbor could lead to employers being on the hook for not only the pension benefit promised, but also having to provide full social security benefits for those employees, without the benefit of having ever paid into the system. This would be catastrophically expensive. As such, it is also universally accepted that the wise course it to adjust the benefits to satisfy the law before we are in violation.³

3. In 2019, tier 2 benefits for every police officer and firefighter (except Chicago) were improved as part of the deal consolidating their investments. The benefit changes were heavily negotiated and designed to satisfy safe harbor so as to prevent the huge cost associated with failure. At the time, the same benefits were promised to Chicago police and fire.⁴

4. Actuarial analyses of this benefit change indicate that while this benefit change will “by and large” satisfy safe harbor, there still exists limited circumstances where certain employees will still fail. As such these actuaries suggest that limited benefit improvements may still be necessary in the future.⁵

5. The changes recently passed to Chicago police and fire pensions are the exact same benefits granted to first responders across the state. This means that they do nothing more than solve the tier 2 problem.

Many have opined recently about this. Let me be very clear. Any increase in benefits will put strain on a city whose finances are already problematic and whose pension systems are already woefully underfunded. There is no way to avoid that fact, but that is the worst reason for inaction. The notion that we should delay the fix is to suggest that ignoring the problem will somehow make it go away.

The fact is that this debt and obligation to pay it exists whether we passed this legislation or not. Passing it only makes it transparent and forces everyone in government to acknowledge it and devise a plan to pay for it.⁶

In all the years that I have worked on pensions I have learned a few absolute truths. First, every attempt to fix pensions costs money and so it is never convenient to do any fix “today.” However if you don’t fix it today it will be exponentially more expensive and harder to accomplish tomorrow and again, even harder the day after. In the 80s and 90s Paul Vallas skipped pension payment after pension payment (either for the city when he was budget director or at CPS when he was CEO), causing the massive accumulation of debt Chicago suffers with today. We should never ever seek to repeat that irresponsible decision making. Governor Pritzker made not only the right decision, but unequivocally the most financially responsible decision when he signed this bill. Remember, this change was coming one way or another. As such, acknowledging it sooner means that the city can pay for it now instead of later, and that always provides the best protection for our valued first responders at the lowest possible cost to the taxpayer. I dare anyone to prove me wrong.⁷

One last caveat. S&P recently opined negatively about this, suggesting this legislation conferred benefits more than the bare minimum needed to solve the tier 2 problem.⁸ Again, this is divorced from the realities of democratic governance. As I stated previously, this change is not perfect. It solves the problem, but still might need further adjustment, meaning it actually falls short in some instances. Clearly, it is not excessively over generous. Additionally, it was heavily negotiated with all stakeholders. S&P suggesting that only the bare minimum is acceptable is folly. Negotiations produce the best outcome achievable, and this bill does exactly that. I am confounded that an institution that preaches financial responsibility would suggest that continued debt accumulation that makes any solution even more expensive would be better than addressing the problem in a way that at worst is only slightly less than “ideal.”

In the news

I called Brandon Johnson’s successful push to eliminate parking mandates on housing construction near transit a “pro-growth move” that “crosses ideological lines” in a great story by the Chicago Tribune’s Jake Sheridan. This reform was an item on the (unofficial) Chicago Abundance Agenda. The mayor should do more things deserving of praise and fewer things deserving of criticism.

I joined Tom Bevan on the RealClearPolitics podcast to discuss the suite of tax and fee hikes recently floated by the Johnson administration, including a revival of the city’s corporate “head tax.” The segment has 30,000 views on YouTube.

I joined Paris Schutz on Fox32 to discuss the leaked CTU political budget, first published by The Last Ward.

And I joined the Mincing Rascals podcast on WGN to discuss the Pritzker presidential campaign, redistricting reform, and more. My “green light” recommendation: This performance of “Azúcar” by the legendary Eddie Palmieri, who passed away at age 88 last week.

1. “The Union and any employer are prohibited from contributing money or anything of value (such as the use of facilities, equipment, or supplies) to promote the candidacy of any candidate for Union office.” (Source)

2. This is the most concerning line in Martwick’s statement. There has not been a single actuarial study, even of a preliminary nature, that shows when and how Tier 2 pensions may trigger a safe harbor violation. Dumping a new, multibillion-dollar liability onto generations of Chicagoans in the name of safe harbor without producing this basic piece of due diligence for public scrutiny is irresponsible. Martwick claims his opinion on this matter is “universally accepted as fact.” Several public criticisms of the bill show otherwise.

3. Neither Martwick nor any of the bills’ proponents have produced an actuarial study for the public showing this is true.

4. Downstate police and fire received a sweetener in exchange for consolidating their pension funds. But Chicago police and fire did not consolidate their pension funds. Why should they receive the same sweetener?

5. This apparent deficiency in the bill again highlights the need for an in-depth, actuarial analysis of the safe harbor issue that is presented to the public before lawmakers consider any more sweeteners.

6. No one in Illinois government has presented evidence to the public showing why this action is necessary.

7. The onus was on lawmakers to prove why this pension sweetener was necessary, before passing it. It is not the responsibility of constituents to prove lawmakers wrong after the fact. Again, Illinois lawmakers have not provided any proof that this bill was necessary.

8. Specifically, S&P analysts wrote: “Tier II pensions have come under increasing scrutiny statewide in recent years … reform proposals have varied widely in their impact on benefits (and hence on government liabilities), ranging from minimalist proposals that would tie the Tier II salary cap to the Social Security wage base, to proposals that, like HB3657, include much more generous benefit expansions.”