Civic Federation president questions whether CPS can afford $1.5B cost of new teachers contract

The first-year cost is not the issue. The problem, according to Laurence Msall, is what happens after that.

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Civic Federation president Laurence Msall.

Civic Federation President Laurence Msall

Rich Hein / Sun-Times file

Civic Federation President Laurence Msall said Friday he has “significant concerns” about whether the Chicago Public Schools can afford the five-year, $1.5 billion contract that ended the 15-day teachers strike.

The first-year cost is not the issue. More than half of that $137 million price tag is already built into the CPS budget.

The rest will come from the $68 million saved by compensating teachers for just five of the 11 school days spent on strike and from Mayor Lori Lightfoot’s decision to, as a top mayoral aide put it, “scrape the mayonnaise jar.” That is, declare a $300 million tax increment financing surplus that is the largest in Chicago history. It will generate an additional $163 million for the public schools — $66 million more than the school system received last year.

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The question, according to Msall, is what happens after that? How will CPS cover expenses that will top $500 million annually by the contract’s fifth year?

“The only source of revenue they have are property taxes. [But] they’re limited under … law to the rate of inflation or 5%, whichever is less, unless they’re gonna go to referendum. And there’s never been a city referendum in the last 50 years for increased funding for the public schools,” Msall told the Sun-Times.

“Their other source of revenue is the state. And they’re heavily reliant already on the governor keeping his commitment to the new, evidence-based school aid formula. ... But the student population loss at Chicago Public Schools is very significant and affects the resources they’re eligible for from the state.”

CPS has been hemorrhaging students since 2003, when enrollment topped 434,000; it now stands at 355,156 students. The bleeding eased somewhat this year. Enrollment was down by about 6,000 students, compared to 10,000 a year ago.

Msall was not appeased.

“The cost of the Chicago Public Schools is rising exactly at the same time that the student population is falling and predicted to continue to fall, due to the change in population in Illinois,” he said.

How, then, can CPS afford a contract that includes a 16% pay raise over five years; more nurses, social workers, librarians, case managers and clinicians; $35 million to reduce overcrowded classrooms; and increased staffing for special education?

“They would have to go to a referendum. Or they would have to convince the City Council — which is not capped because it’s a home-rule unit of government — [to] go for an increase in property taxes” and give the money to CPS, Msall said.

Msall acknowledged a City Council bailout is unlikely. Lightfoot’s $11.65 billion budget is already precariously balanced with one-time revenues. The threat of a massive property tax increase still looms after Lightfoot came up empty in Springfield in her requests for a casino gambling fix and a graduated real estate transfer tax.

Pressed on whether Lightfoot agreed to a teachers contract CPS can’t afford, Msall said, “A lot of it depends on whether the school aid formula grows at the [$70 million-a-year] rate that proponents project and whether the state of Illinois, which is in bad financial shape, can meet those goals.”

Some political observers have questioned whether Lightfoot’s decision to require CPS to reimburse the city for $60 million in pension contributions previously covered by the city and repay the city for $33 million in security costs could hurt the school system’s case for continued increases state funding.

When suburban and downstate lawmakers agreed to support a change in the school aid formula that gave CPS a $450 million cash infusion, they did not expect the mayor to claw back $93 million of that money to balance the city budget.

But Msall argued it’s high time CPS cover the pension costs of school administrators who draw their retirement benefits from the Municipal Employees Pension Fund.

“Every government should be responsible for paying for not just its employees’ salaries but all of their related benefits. And when we make a decision ... about granting salary increases, it should recognize the full cost of them,” Msall said.

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