The Chicago Public Schools for the last several yearshas passed a series of limp-along budgets, allowing schools to survive but not much more.
And this year? CPS’ 2016 budget, released by schools officials Monday, offersmore of the same but goes one step further down the path of irresponsibility — it includes a massive booby trap that could explode come January.
The proposed $5.7 billion budget is a mess, a patchwork of untenable solutions, including $255 million in debt restructuring (translation: putting off debt for another, more expensive day) and a $480 million hole that CPS hopes state political leaders will fill by trimming that amount from CPS’ $676 million pension bill. There’s your booby trap. If state leaders fail to agree or reach a compromise, boom. Halfway into the school year CPS could find itself $480 million short, likely forcing the layoff of hundreds or thousands of teachers and facing larger class sizes, highly disruptive school reorganizations and more unsustainable borrowing.
What’s the alternative? CPS’ new CEO Forrest Claypool and Mayor Rahm Emanuel say bankruptcy — which isn’t allowed by state law currently— isn’t an option. It would do more damage than good, they say, and fail to fix CPS’ long-term structural deficit.They make a good argument, but would the long-term damage of bankruptcy be any worse, or even as bad, as that booby trap explosion?
The good news: Pieces of a long-term solution are present in CPS’ proposed budget, which faces a Board of Education vote on Aug. 26. For the first time in ages there is evidence of serious CPS cost-cutting as well as genuine attempts to generate desperately-needed new revenue. The mayor has proposed raising property taxes for CPS, which face an annual cap, by as much as about $225 million. This includes two new property tax levies, for pensions and for capital projects.
That property tax hike, though, must be accompanied by two other big actions, the mayor says: pension relief from Springfield and a major teacher give-back. The idea here, the mayor says, is that everyone sacrifices — Springfield, Chicago taxpayers and teachers.
Pension relief from Springfield: CPS’ $480 million ask from Springfield — a long shot — includes two components. The first is $200 million toward annual pension costs, a proposal we strongly support. CPS is the only Illinois school district that doesn’t receive a significant state payment for pensions. The remaining $280 million amounts to another partial pension holiday for CPS, reducing CPS’ $676 pension bill by that amount. That is a mistake. Pension holidays got Chicago into the fiscal messes it faces today.
Teacher give-back: Both Emanuel and Claypool want to phase out the so-called 7 percent “pension pickup.” Since 1982 teachers have contributed just 2 percent toward their pensions, with CPS picking up the remaining 7 percent of what’s supposed to be the teachers’ contribution. This is a common in Illinois — the majority of school districts pick up all or part of teacher costs — but it’s something CPS can no longer afford. The Chicago Teachers Union refuses, with President Karen Lewis calling this a “strike worthy” issue. As CPS and CTU restart contract negotiations, we hope CTU will reconsider. A negotiated settlement is far preferable to CPS imposing this unilaterally outside collective bargaining, as Gov. Rauner would like CPS to be able to do.
It’s a painful concession but there is much the CTU can demand in return. CTU lists many legitimate non-economic demands, including less standardized testing, changes to the way teacher evaluations are used and more grading freedom. An openness to a partial or full pension pickup rollback will give CTU tremendous leverage as it negotiates on these important working condition issues.
If nothing gives, if there is no new revenue and no significant savings, we all know what potentially lies ahead: disaster in the classroom come Jan. 1 or, for better or worse, bankruptcy.
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