Board of Ed to consider $215M more in borrowing for next school year

SHARE Board of Ed to consider $215M more in borrowing for next school year

Chicago Board of Education logo. | File photo

As Chicago Public Schools asks permission to borrow up to $396 million in grant anticipation loans to close out the school year and make its pension payment, school officials also want to be able to borrow up to $500 million for the new fiscal year starting July 1.

They’ve also banked again on a failed lawsuit against the governor that now asks a judge to put Chicago’s teachers into the statewide teacher pension system and to award more state aid directly to CPS.

CPS spokeswoman Emily Bittner said that at Wednesday’s upcoming Board of Education meeting, “the board will consider a measure to provide additional borrowing authority of $215 million” bringing approved borrowing for the 2017-18 school year to $500 million.

The loans, to be paid back with state aid and property taxes, could float the district until that money actually lands in district coffers, according to the resolution presented for the school board’s vote.

Bittner continued, “With the FY17 budget questions behind us, CPS is beginning to turn its attention to the challenges that we will face in FY18.”

Last week, Mayor Rahm Emanuel announced that CPS would keep its doors open for the rest of the school year and manage a $721 million pension payment due June 30 by borrowing $389 million against money the state owes CPS but hasn’t yet disbursed.

This week, school board members will approve up to $396 million in “grant anticipation notes” — CPS can borrow only 85 percent of the $467 million the state is late in paying CPS’ block grants. Though specific terms haven’t been negotiated yet and won’t be until after the board vote, several aldermen and the Chicago Teachers Union have likened the borrowing plan to a payday loan. Interest rates will likely be high for the state’s largest district with junk bond ratings. By state law, the interest rates cannot top 9 percent.

CPS continues to blame Gov. Bruce Rauner for its ongoing money woes, and not only for vetoing a bill containing $215 million of conditional state aid that schools officials had built into their budget before the conditions were met.

“We expect that one of the most significant challenges will come from Governor Rauner’s refusal to fund CPS students equally, as he spent this fiscal year perpetuating a racially discriminatory funding formula that gives Chicago students 78 cents for every dollar students in the rest of the state receive on average,” Bittner said, repeating language CEO Forrest Claypool used in an unsuccessful lawsuit accusing Rauner of violating the civil rights of Chicago’s poor, minority schoolchildren.

Late Friday afternoon, CPS officials quietly filed an amended complaint under the same Illinois Civil Rights Act, which the judge who dismissed the case in April had invited them to do by May 26.

This time, CPS lawyers argue that the state’s funding for school districts and teacher pensions violate two very specific clauses of that law barring the State from utilizing “criteria or methods of administration that have the effect of subjecting individuals to discrimination because of their race, color [or] national origin . . .”

CPS attorneys say the result of the state paying less to Chicago teacher pensions than the rest of the state’s teachers shortchanges the city’s students, more of whom are poor and minority than in the rest of Illinois. Among the relief they seek from Judge Franklin U. Valderrama is to put Chicago teachers into the statewide Teachers Retirement System and to “award CPS damages in an amount sufficient to compensate CPS for the State’s discriminatory funding.”

“It appears that Mr. Claypool feels that if he repeats the same thing over and over it will become true,” Rauner spokeswoman Eleni Demertzis said. “We are proud of the fact that Governor Rauner both increased PK-12 funding to the highest level in state history and has continuously urged the creation of an equitable school funding formula.”

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