Teachers union rejects CPS contract offer

The Chicago Teachers Union — citing a lack of trust and concerns about long-term school funding — unanimously voted Monday to reject a four-year contract offer.

In the days ahead of the vote, the teachers union had called the Chicago Public Schools proposal a “serious” one, leading some to believe a tentative agreement was likely.

“I know people were expecting something completely different, but that’s not how we work at the Chicago Teachers Union,” CTU President Karen Lewis told reporters after the vote Monday.

Though “a lot of things were great” in the contract offer, Lewis said, the union’s Big Bargaining Team was concerned that CPS hasn’t come up with a way to provide long-term financial stability for the cash-strapped district.

“The cuts that they are asking for will not solve the problems,” Lewis said. “So what we are looking for is sustainable funding, which means serious revenue. That is not in this contract. There is no guarantee that the promises that are made are promises that can be kept.”

With the rejection, Lewis said she could not rule out a teachers strike but added it would not happen before mid-May. The last day of classes is June 21.

Chicago Public Schools CEO Forrest Claypool said the district was “disappointed.”

“Despite unprecedented financial problems that threaten our classrooms, CPS reached a tentative agreement with CTU leadership after 14 months of negotiations — including 18 straight days at the end of talks. This agreement provided pay raises, guaranteed job security and met the union’s key demands, including restrictions on charter school expansion, raises for seniority in addition to cost-of-living increases, and more classroom autonomy for teachers,” Claypool said in a written statement.

“CPS remains committed to reaching an agreement with our partners at the CTU that is in the best interest of our students, parents, teachers and city. We are committed to returning to the bargaining table and working around the clock to reach an agreement. As we continue to bargain, we must move forward with plans that restore fiscal stability to the district.”

Union representative Monique Redeaux-Smith called CPS’ promises in the offer “very vague and unclear.”

As the team of 40 negotiators — made up of teachers, social workers and other school staffers — discussed the proposal, it also became clear there was a lack of trust in Mayor Rahm Emanuel to follow through on commitments on charter schools, as well as promises about school funding, a source told the Sun-Times.

In the rejected offer, teachers would have received raises of 2.75 percent next school year and then 3 percent for each of the next two years, the Sun-Times learned. Teachers would continue to receive “step and lane” raises for experience and added education through June 2019.

But CPS wanted teachers to pay their entire 9 percent pension contribution, including the 7 percent the district agreed decades ago to fund. So veteran teachers would start paying 3.5 percent more toward their pension starting in July and then the whole 7 percent as of July 2017.

Lewis said CTU members were concerned about the pension pickup in particular.

“This came out of our pockets as opposed to a steady stream of revenue,” Lewis said.

The school district was also looking for at least 1,500 teachers to retire, offering a $1,500 bonus per year of service, according to a written summary of the offer. If fewer teachers retired, the contract would be reopened on July 1 for 30 days of negotiations and mediations before proceeding to fact-finding.

“We are concerned that undue pressure will be placed on our veteran members to retire before they intend to,” said Jim Cavallero, a special education teacher and part of the CTU bargaining team.

With the bargaining team voting against the latest proposal, the CTU and CPS enter a final legal stage of negotiations that starts a 105-day clock ticking toward a strike. This fact-finding phase that will be conducted by a professional arbitrator who has already settled high-profile disputes between the city and the police union, and between the state and prison employees.

Despite her earlier comments about the contract proposal, Lewis said she was surprised to learn last Wednesday that the team didn’t appear to favor the deal.

“But we still wanted to give it an opportunity to percolate and cook,” Lewis said. “The problem is that people are expecting other people to make decisions in a snap piece of time. People need time to sit and digest.”

The CTU’s decision to reject the tentative agreement is likely to have a chilling effect on Emanuel’s attempts to salvage an $875 million borrowing plan abruptly put off last week.

Richard Ciccarone, president and CEO of Merritt Research Services, said investors scared off by Gov. Bruce Rauner’s plan for a state takeover of CPS that could pave the way for bankruptcy were looking for a sign of stability that a new teachers contract would have provided.

Instead, contract talks are back to square one.

“If it was hard before, it will be even harder now without providing some additional enhancement,” Ciccarone said of the borrowing.

“The bond market was looking for political consensus and some level of concession from the unions to show that CPS was making headway in their ability to provide sound finances.”

CPS was planning to use the borrowed money to stave off classroom cuts for the rest of the school year; reimburse its general operating fund for $393 million in already completed capital projects; refinance more than $340 million of debt; and use $90 million to terminate complex interest rate swap arrangements. CPS had to terminate the swap deals because its bond rating fell below the threshold required by those contracts.

If the $875 million borrowing cannot be salvaged at an interest rate the cash-strapped school district can afford to pay, CPS faces a series of difficult choices.

The school system could make classroom cuts it was trying desperately to avoid to meet its Feb. 15 debt service payments. It could raise property taxes for the express purpose of meeting those debt service payments. Or it could default on the bonds, which Ciccarone called a “last resort.”

“They’re already having trouble accessing the market. Defaulting on the bonds pretty much closes the door. They’re not far away from that now. … It would increase the likelihood of a third-party bail-out,” Ciccarone said.

“We need to stop the bleeding. We need to stabilize the financial condition of the Chicago Public Schools. We’re faced with some pretty adverse results here: Either shut down the schools or don’t make debt service if you can’t find the lenders or enact a property tax increase for the purpose of keeping the schools open.”

The CTU’s decision to reject the contract is a major blow to Mayor Rahm Emanuel’s efforts to chart a new, more cooperative course with the teachers union four years after the 2012 teachers strike that was Chicago’s first in 25 years.

The vote happened while Emanuel, the city’s Chief Financial Officer Carole Brown and Deputy Mayor Steve Koch were in New York for meetings with all four Wall Street rating agencies about the city’s finances.

Contributing: Mitch Dudek, Lauren FitzPatrick