For months, Gov. Bruce Rauner and Republican legislative leaders railed against any state “bailout” of the cash-strapped Chicago Public Schools, urging the city to find its own way out.
As lawmakers left the Capitol after securing school funding and a stopgap state budget, it became clear CPS came away not only with the potential for long-sought “pension parity” and increased state aid but also a big chunk of a state grant.
CPS is in line for another $350 million from the state and $250 million more from property taxes legislators approved Thursday.
So what happened?
Sources close to the negotiations say Mayor Rahm Emanuel and Democratic leaders had asked for $650 million from the state for Chicago’s schools, insisting they otherwise wouldn’t be able to open this fal.. But Rauner and the Republican leaders balked.
It wasn’t until the Rauner administration agreed to give state money for Chicago teacher pensions in exchange for a pension-reform bill that Democratic leaders and Emanuel came close to their target number — and Rauner and other Republican leaders came closer to the pension reform they wanted.
Democratic leaders initially had sought to have a $217 million appropriation in the budget to pick up the normal cost of Chicago teacher pensions. The Rauner administration countered with a standalone bill to give $205 million for pensions by June 1, 2017, if the General Assembly passes pension reform by Jan. 1, 2017.
Emanuel, who worked the phones for days to get legislative leaders on board with the CPS package, was willing to go higher on the property-tax levy — from $175 million to $250 million. That helped seal the deal.
If the pension-parity bill hadn’t been tied to pension reform, it would have been viewed as a Chicago bailout.
So what does the $600 million mean for CPS? There’s no question CPS fared well, given that schools chief Forrest Claypool and Frank Clark, the Chicago Board of Education president, had set their bottom line at $525 million for what CPS needs to function.
But facing a billion-dollar-plus deficit, CPS still has to come up with another $300 million.
About $455 million of the new money goes straight to the Chicago Teachers Pension Fund, but that will, according to school officials, “free up operating revenue that CPS currently takes out of classrooms to fund teacher pensions.”
The state will contribute $205 million toward Chicago pensions — so far just for the 2017-18 school year, when CPS will owe about $700 million. That goes away if the state doesn’t pass pension reform by January.
“Looking ahead, Chicago taxpayers will be required to pay the full $740 million in [fiscal year 2018] and higher amounts beyond,” according to a CPS fact sheet. “But CPS believes that it is an important indication of the state’s willingness to pursue pension equity.”
Chicago officials had argued the state paid $3.7 billion in 2015 toward teacher pensions outside Chicago and only $12 million for Chicago — about $2,300 per student outside the city vs. $31 per CPS student. And Claypool cited the inequity of making Chicago taxpayers pay twice for pensions— once in property taxes for their own teachers and again in income taxes for the rest of the state’s teachers.
Another $250 million was approved by state lawmakers but will come from a special Chicago property tax dedicated to funding teacher pensions.
In August, CPS will receive another $135 million in state grants.
CPS also gets to keep $74 million it otherwise would have lost due to declining enrollment.
CPS officials wouldn’t say Friday how the money might ease previously projected cuts of about 40 percent in per-pupil funding.
Emanuel is promising schools “not only will open on time but without any major disruption to our classrooms.”
Troy LaRaviere, a principal ousted by CPS who took over Friday as head of the Chicago Principals and Administrators Association, said, “That all depends on, one, the resources that are actually going to make its way to CPS, two, whether CPS is going to budget them appropriately.”
LaRaviere noted that CPS still plans to go ahead with a new, $60 million high school.
“How is CPS going to manage what they get?” he said. “And are they actually going to use what they get to fund schools? Or are they going to redirect money toward wasteful projects, as they always do, and continue to cut?
“The message may be, ‘You’re still going to have to go without an assistant principal, you’re still going to have to go without a counselor, you’re still going to have to increase class sizes by cutting teachers and putting 40 kids in a classroom.’ ”