Rauner: State board can block CPS bond deals

Gov. Bruce Rauner said Monday the Illinois State Board of Education has the ability to block Chicago Public Schools from entering into bad bond deals.

And less than an hour later, CPS CEO Forrest Claypool had a simple response: No, they don’t.

Rauner made the statement just three weeks after CPS borrowed $725 million by selling bonds carrying an extraordinarily high interest rate of 8.25 percent — and days after his handpicked education leaders announced they’re investigating the finances of the state’s largest district.

“I hope that [blocking a bond issue] never becomes necessary, but we’ve got to be ready to take action and step in,” Rauner said.

The governor also reiterated that recent comments he made highlighting the ultra-shaky financial footing of CPS were not meant to scare lenders and imperil the school system as a way to further his position that the state should take the reins — an assertion made by Mayor Rahm Emanuel’s administration earlier this month.

Rauner also downplayed the state education board’s decision to launch a probe into CPS, claiming that’s also occurring at five other school districts around the state.

“We have a duty to evaluate what’s going on in that school district, learn the facts and then decide what’s appropriate action to take,” Rauner said. The move could bolster his effort to have the state take control of CPS.

“At this point we’re not recommending that the state take any particular action yet. We want to be ready,” he said.

Speaking at Curie Metropolitan High School on the Southwest Side, Claypool denied that state authority to block CPS borrowing exists.

“The governor has come up with a number of novel legal theories, but I would just refer him back to the statute,” Claypool told reporters. “The statute is very clear that the authority he seeks to exercise does not apply to the Chicago Public Schools.

“We welcome the governor’s help, we welcome the governor’s concern about education but we hope he’ll show the same amount of concern about poor children throughout the state of Illinois who are suffering under this system,” he continued.

The latest tussle between the governor and Chicago’s schools system centers on a phrase in the school code both leaders are leaning on: whether or not CPS is “subject to” a section of school code establishing a School Finance Authority for districts in cities with more than 500,000 inhabitants.

Naturally, Claypool believes the district is still ruled by that article, which would allow the state board merely to notify Chicago’s mayor of any financial difficulty an investigation turns up.

But Rauner contends that as of 2010, it isn’t anymore.

“That applied only when the reform board existed, which it no longer does,” Rauner spokeswoman Catherine Kelly said.

Rauner also expressed annoyance at critics of his school-reform efforts.

“Everyone’s yelling and me, [but] I just got here,” Rauner said while touring Instituto Health Science Career Academy.

“Speaker [Mike] Madigan has resisted efforts to reform the state funding formula for years — for many years, he’s blocked efforts,” Rauner said. “Now everybody this year is yelling at me, they’re saying, ‘Governor, you change it!’ I would love to change it, there’s a lot of things I want to change. We’ve got to change a lot. But somehow — I’m new — and it’s all my fault and I’m the defender of it, I mean, good grief!”

The reality, Claypool said, is that “I think the public expects the governor to govern, and so I think what we’d all like to see is the governor’s formal proposal to end this discriminatory funding system. What is his proposal to provide school districts in Aurora, Elgin Decatur, North Chicago and Chicago a fair funding system that no longer discriminates against poor minority children?”