Rahm, CPS reject Rauner $450M advance — ‘it simply borrows from the future to pay for the past’

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Mayor Rahm Emanuel rejects $450 million plan to help with Chicago Public School pension payments. | AP file

Mayor Rahm Emanuel will try again Tuesday to salvage his plan to put off the financial day of reckoning at Chicago Public Schools after shooting down an offer from Gov. Bruce Rauner that appeared to be tailor-made to drive a wedge between Emanuel and Illinois House Speaker Michael Madigan (D-Chicago).

With a $634 million payment to the Chicago Teachers Pension Fund due Tuesday, Rauner offered to advance CPS $450 million in state grants that would normally be distributed to the district throughout the fiscal year.

The accelerated grants — coupled with $184 million from CPS — would have been used to make the full pension payment while the Illinois General Assembly works on a longer-term fix, the governor’s office said.

But, after another weekend of behind-the-scenes horse-trading, Emanuel rejected the offer as more of the same.

“We appreciate the governor’s gesture, but the use of this year’s dollars to pay last year’s pension payment follows the same path that got the schools into the current financial mess,” mayoral spokeswoman Kelley Quinn said in an email Monday. “We need a real solution like Governor Rauner’s proposal last week — pension parity and funding relief so that Chicago schools are finally treated like every other district in the state.”

Interim CPS CEO Jesse Ruiz echoed that, saying “The governor’s offer to accelerate block grant funding unfortunately does not solve the problem – it simply borrows from the future to pay for the past. We are still awaiting details, but this proposal runs the risk of depleting early childhood and special education resources in order to make a 2015 pension payment. What our children really need is for us all to come together to figure out real and long-term solutions.”

That appeared to leave Emanuel with little choice but to try again Tuesday to cut down on no-shows and round up the 18 votes he needs to put off the pension payment until Aug. 10. That’s the same day state school aid payments are due to school districts across Illinois.

Last week, the Illinois House voted down the delay.

Now with no room for error, Emanuel is hoping to succeed after spending the last week explaining the bill that was dropped in the laps of lawmakers at the last minute.

If he’s wrong, the mayor will be forced to make an untenable choice between making payroll or the pension payment.

CPS is out of cash and doesn’t have the money to make the full payment without massive layoffs and classroom cuts. Making a partial payment could trigger a pension fund lawsuit and a further drop in a CPS bond rating that’s already been reduced to junk status.

The “six-week reprieve” could buy time to resolve a state budget stalemate between the powerful Democratic speaker and the Republican governor, and move to find a long-term funding solution for education to end what Emanuel calls the “structural inequity” on teacher pensions that has shortchanged Chicago.

Ald. Will Burns (4th), newly elected chairman of the City Council’s Education Committee, said Emanuel was wise to reject Rauner’s offer to “front-load state grant money” to help CPS make the teacher pension payment because the governor’s offer raises more questions than it answers.

“Were there strings attached to that grant money? What are the repercussions for using it to make the pension payment? Is this a cash-flow management tool where $450 million comes in at a later time and you back-fill it later?” he said.

“What happens next year? Where are we going to be on June 30, 2016? We’ll be right back here next year without a comprehensive approach by the state to fund public schools.”

Assistant House Majority Leader Barbara Flynn-Currie (D-Chicago) said she has no idea what will happen when the Illinois House reconvenes Tuesday. Nor would she place odds on Emanuel’s chances to round up the 18 votes he needs to salvage his plan to delay the pension payment.

“If the governor is for the program, the odds are good. If the governor has withdrawn his support, then they’re not so good. I just don’t know what it means that the governor has made a proposal that the mayor has rejected,” Flynn-Currie said.

Currie said the latest exchange of offers has the powers that be in Springfield “scratching their heads and trying to figure out what the best approach is” on Tuesday.

“The last I heard, there was no definite plan. It depends on what the governor is prepared to do and what the city has done in the meantime,” Flynn-Currie said. “These things change from minute-to-minute.”

Mike Schrimpf, Rauner’s spokesman, gave no indication about whether or not the governor was still willing to support the bill up for a vote Tuesday.

“The governor has proposed a long-term solution and stands ready to work with the Mayor and legislative leaders on passing a comprehensive plan to fix Chicago’s finances. The governor’s plan provides the city with short-term relief while we wait for Speaker [Michael] Madigan to get serious about reform and helping the people of Illinois,” Schrimpf said.

Schrimpf’s jab fueled speculation that Rauner’s latest offer was yet another attempt by the governor to drive a wedge between Emanuel and Madigan.

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