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Civic Federation tells Board of Ed to reject CPS budget

For at least the fifth year in a row, the Civic Federation has slammed Chicago Public Schools’ proposed $5.7 billion budget as unbalanced and unsustainable, saying the district cannot bank on $480 million in help from Springfield that has not even been promised.

Civic Federation President Laurence Msall urged the Board of Education to vote against the district’s proposal at its meeting on Wednesday and to insist instead on a budget with a real contingency plan.

“This budget is yet another financially risky, short-sighted proposal and fails to provide any reassurance that Chicago Public Schools has a plan for emerging from its perpetual financial crisis,” Msall said, releasing a 92-page analysis Tuesday. “If stakeholders do not come together now to develop a multi-year plan, the Federation is deeply concerned that CPS could fail, with devastating consequences for the future of Chicago and Illinois.”

CPS has faced structural budget gaps of more than $500 million in each of the past five years and has run out of its usual gimmicks for solving this one, he said. Though CPS has cut some $200 million in spending, he accuses the district of relying on another $200 million in “scoop and toss” borrowing and of understating costs since teacher contract negotiations are ongoing.

The Civic Federation recommends a multiyear budget plan that would end CPS’ current practice of paying 7 percent of the typical 9 percent employee contribution toward teacher pensions — something that would have to be negotiated with the Chicago Teachers Union — and reinstate a special property tax levy for the Chicago Teachers Pension Fund.

It also wants CPS to publicize its plans for what happens should the state — gridlocked on the issue — ultimately balk.

“In the budget document, CPS says it will make a cuts and/or engage in ‘unsustainable borrowing’ if the State of Illinois does not provide additional pension funding,” the analysis read. “This is not a contingency plan.”

CEO Forrest Claypool also recently told the Sun-Times that he has no plan B in the event that state funding doesn’t materialize.

Board of Education Vice President Jesse Ruiz said after a panel discussion Tuesday at the City Club of Chicago that he plans to vote for the proposed budget, saying there’s still time for the General Assembly to act.

He repeated his opposition to a CPS petition for bankruptcy, even if state law were changed to permit it, as Gov. Bruce Rauner has suggested for the district with a $1.1 billion structural deficit for the school year beginning in a few weeks.

“We wouldn’t want to put our students through a bankrupt school district,” Ruiz said. “Since it’s our decision and solely our decision, it would never be filed on my watch.”

Bankruptcy attorney George Panagakis, who also participated in the panel about possible bankruptcy for CPS, said that only the district could decide to file for bankruptcy, but the process of finding out whether the district is eligible to file under Chapter 9 could take up to a year. CPS would have to prove it’s negotiated as far as possible with creditors and that it’s actually insolvent with no other options, he said.

“A court can’t impose any increase of taxes, that’s all left up to the municipality,” Panagakis said, “but if it is possible to reasonably raise more taxes, then that would be a basis for dismissing the case.”

Civic Federation FY2016 CPS Budget Analysis