Mayor Rahm Emanuel was attempting to cobble together a plan Monday to stave off a threatened shorter school for the Chicago Public Schools that could rely on using a mix of borrowing, tax-increment financing surpluses and job cuts for support staff, sources told the Chicago Sun-Times.
Alderman were supposed to be briefed Tuesday on Emanuel’s bailout plan. But, more than a week after the mayor declared that classes wouldn’t end early in June despite threats to do so by schools CEO Forrest Claypool, the briefings have been postponed for a second time.
“We are going to reschedule the aldermanic briefings on CPS, and we’ll be in touch with them in the next few days to reschedule,” City Hall spokesman Adam Collins said Monday. “This is a very real, very complex problem, and each move or option has its own implications for students, parents, teachers and the financial markets”
Ald. Ricardo Munoz (22nd) was outraged.
“It’s unfathomable that the Board of Ed. needs the city of Chicago as a partner, and yet it’s delaying telling the corporate authorities — the Chicago City Council — what the options are or what the status at least it,” Munoz said. “It’s just unfathomable and unacceptable.
“I have no clue what’s going on,” Munoz said. “But all I can surmise is that they really don’t know what they’re doing over there… It is scary. It’s very scary.”
The negotiations have been complicated by growing tensions between the mayor and Claypool and the difficulty pinning down exactly how much money the cash-strapped schools system still needs.
CPS officials have said they have a $129 million budget hole they need to fill to get through the end of the school year. But delays in some payments from the state have also affected the district’s cash flow, which has made it difficult to determine how much more money needs to be found, according to sources close to the ongoing discussions at City Hall.
One source said CPS continues to hold out for a last-minute miracle in Springfield.
The remaining options all carry consequences that threaten to drag the city under with CPS.
City and schools officials think state law might allow them to push back some or all of the $721 million pension payment owed by June 30 to the Chicago Teachers Pension Fund, a knowledgeable source said, adding that a delay of up to 60 days would solve some of the cash-flow issues since tax revenue typically rolls in by August.
Chuck Burbridge, who heads the pension fund, couldn’t be reached for comment Monday. Two years ago, he opposed such a proposed delay, threatening to sue, which might have hurt CPS’ ability to get good rates on the short-term borrowing it relies on for operations.
CPS also might borrow some of the money it needs, the sources said. But that likely would come at exorbitant interest rates in light of the school system’s poor bond ratings.
Somewhere between $40 and $80 million from tax-increment financing surpluses also could be part of the plan, one source said, and though it’s being described as a “bridge loan,” it isn’t likely to be repaid.
Teachers wouldn’t be laid off, the source said, but other school support staffers — such as some clerks and assistant principals — could to lose their jobs, and school vendors also might have to wait to get paid.
But another tax increase — in addition to the $250 million already imposed for teacher pensions and the $45 million for school construction — would not solve the need for an immediate cash infusion.
CPS is in a fix for a second straight year after balancing its budget by counting on state money that it didn’t have and that didn’t come through because of the budget standoff in Springfield and because the state is so far behind in paying its bills.
On top of that, CPS had counted this year on getting an extra $215 million for teacher pensions that Gov. Bruce Rauner agreed to only on the condition the legislature also passed his version of pension reform. By December, though, Rauner vetoed paying that $215 million, saying that Democrat-led lawmakers hadn’t met his conditions.
That’s led Claypool to cut school budgets in the middle of the year again and to sue Rauner and the Illinois State Board of Education, unsuccessfully arguing that the state discriminates against CPS students, mostly minority and poor, by providing better funding for wealthier and more heavily white districts elsewhere.
On the same day that a Cook County judge dismissed the lawsuit, saying CPS had relied on the wrong statute to make its case, Emanuel said that, despite Claypool’s earlier warning that classes might have to end as much as three weeks early, he would find a way to keep schools open the rest of the year.
The Sun-Times reported Monday that the mayor opposed Claypool’s lawsuit and didn’t know of his CEO’s threats to cut school days until after they’d been made public, increasing the tensions between the two men, who’ve been friends for 30 years.