Fed up Chicago Public Schools parents who demanded every penny of the city’s TIF surplus to reverse major budget cuts this year aren’t getting their wish.
But their push has clearly paid off. Over two years, CPS is on tap to get as much as $74 million.
Mayor Rahm Emanuel, who released his 2014 budget on Wednesday, will declare a surplus in tax-increment financing funds of $49 million, about $24 million of which will go to the schools. By law, CPS gets about half the surplus. This is on top of $20 million in TIF surplus cash the city last year allocated for CPS in 2014.
That $49 million surplus figure isn’t all the unallocated cash in the city’s 151 TIF districts. The city says the total is about $167 million.CPS parents wanted CPS to declare a much larger total surplus and wanted CPS to get far more than $24 million.
That didn’t happen.
But CPS got more than it usually gets. Historically when the mayor’s office declares a surplus, thecity takes only about 20 percent of the total cash balance. Emanuel bumped that up to 29 percent, the city said, following a pledge earlier this month to make it at least 25 percent every year.
The Sun-Times Editorial Board also thinks the city could have gone higher than 29 percent but it’s still a victory. Parents from Raise Your Hand and other groups advocated all summer long for TIF cash to help reverse major budget cuts to schools — layoffs of classroom teachers, art teachers, special education aides, reading coaches, you name it — and they made a real dent.
CPS tells me they’ll get the $24 million in two parts — half in spring 2014 and half in fall 2014, with a pledge to try to spend the money in schools quickly this spring. We’ll see how that goes.
And there’s more: the $24 million isn’t all the TIF money CPS is getting. Over two years, it’s due to get up to$74 million total in TIF cash.
In 2015, CPS will get another $40 to $50 million on top of the $24 million because of new property tax value created by the Near South TIF, which is expiring. This is how the whole TIF thing is supposed to work. A TIF freezes property values in an area for about 23 years and then channels the increment, or the growth, each year into a fund that’s used for infrastructure and development in the district. The idea is to enhance the area so that when the TIF expires, the tax base is expanded.
In 2008, when a major TIF expired, CPS didn’t add that new property tax value to its base, probably fearful it would be perceived as a tax increase. That was politically cowardly. Emanuel said he’d stop that practice. Next year, CPS could get as much as $50 million from the expiring Near South TIF and the city will get $15 to $16 million, the city says. That new revenue will be generated year after year.
We’ll have to watch next year to see if CPS really does this — they have just one year to capture that value or it’s lost forever.
Last point: it’s important to remember that a TIF surplus is helpful but it’sno match for the massive money troubles facing the Chicago school system. A real solution begins with reducing teacher pensions and raising new revenue for a school system in desperate need of it.