Bad news everywhere
Wednesday, Mar 23, 2016 - Posted by Rich Miller
* The Illinois State Board of Education released a report the day after the primary, so I didn’t get to it. Let’s circle back…
499 of 852 [school[ districts reporting budget information — 58.6 percent — are deficit spending, meaning they’re spending more than their revenues in main operating accounts, such as for instruction, school maintenance and transportation expenses. That’s the highest percentage since at least the 2010 school year.
A key concern is that districts can look good on paper and increase their financial profile score by borrowing to bolster their operating accounts and dipping into reserves to cover the red ink, among other measures. […]
“They’re issuing debt and leveraging future revenues to sustain operations … and that is not good fiscal practice. It’s not what we do at home and not what any business would do,” [Robert Wolfe, chief financial officer at ISBE] said. […]
One district in the Chicago region, Aurora West School District 129, was on the Financial Watch list in 2015 but got off this year. It was bumped to the second-worst category, the “Early Warning” designation. Getting there entailed issuing bonds in a refinancing deal, dipping into fund balances to cover red ink, and borrowing against future tax collections, according to data in the district’s Annual Financial Report.
* Meanwhile, Mayor Emanuel’s floor leader made a valid point to the Sun-Times that most folks often forget. Union leaders have to face elections, and that often puts political pressure on the candidates…
Ald. Pat O’Connor (40th) told the Chicago Sun-Times that upcoming union elections will complicate contract talks that hit a setback in January, when the CTU’s big bargaining team rejected an offer their leader called “serious.”
“If not closed, it’s pretty well done,” said O’Connor, the longtime chairman of the City Council’s Education Committee now serving as Emanuel’s floor leader. “If you’re looking for collaboration and concession, as you get closer to a union election that becomes harder and harder to do. . . . If they make an agreement, they’re labeled a sellout.” […]
The union will know on March 28 who, if anyone, will challenge the popular Lewis and her leadership team. That’s when nominating petitions are due, but a contested election isn’t expected.
A City Hall source acknowledged that the “likelihood of anyone winning against Karen and Jesse [Sharkey] are remote . . . but they still have to worry about appeasing the left wing” of the union, which opposed the earlier serious offer the source called “a balanced deal with a lot of money and concessions and a lot of things they wouldn’t get in a million Christmases.
* CTU has played politics pretty well with Chicagoans, by the way…
Those are mostly pie in the sky proposals. The union has eschewed ideas like property and sales tax increases. So, they are actually heroes of a sort to beleaguered homeowners who want some budgetary magic to save them from the consequences of their own voting histories.
* Related…
* CTU to decide on 1-day April 1 walkout tonight
* CTU’s April 1 strike legal or illegal? State board would decide: The staff investigates and makes a decision, which can be appealed to the five-person board. Three of them were appointed by Gov. Bruce Rauner, who has tried to weaken labor unions. [One of those three was a Quinn person reappointed by Rauner.]
- nixit71 - Wednesday, Mar 23, 16 @ 12:09 pm:
Why does CTU always assume they are the sole beneficiary of a FTT? When CME routes their orders through their Aurora data center, shouldn’t Aurora West School District 129 get that tax?
- Honeybear - Wednesday, Mar 23, 16 @ 12:18 pm:
Well, it’s hard to say what will be effective. I think CTU will probably get spanked hard for it. I also think that direct action in this manner plays to Rauners hands and might show unruliness. I wish they would pursue asymmetrical strategies. But I’m not a member of CTU and they need to do what is best for them.
- Tone - Wednesday, Mar 23, 16 @ 12:22 pm:
The only solution for CPS is bankruptcy as proposed by Governor Rauner.
- wordslinger - Wednesday, Mar 23, 16 @ 12:25 pm:
Are all these districts borrowing for operations getting all they expected from the FY16 K-12 approp.?
- Tone - Wednesday, Mar 23, 16 @ 12:25 pm:
TIF surplus, sue banks, taxes for graduated income tax, fin transactions, millionaires.
Rahm has declared TIF surpluses every year.
Sue banks for what?
Yeah, right on the other stuff. The state is losing population now, we can ill afford pushing out the wealthy that already pay most of the tax bill.
- wordslinger - Wednesday, Mar 23, 16 @ 12:39 pm:
–The only solution for CPS is bankruptcy as proposed by Governor Rauner.–
LOL.
I wonder what the pension funds and other creditors will get when a bankruptcy judge orders sales of city assets, like O’Hare and Midway.
- Carhartt Representative - Wednesday, Mar 23, 16 @ 12:44 pm:
=I wish they would pursue asymmetrical strategies. But I’m not a member of CTU and they need to do what is best for them.=
From what I understand there are at least 10 other unions including the university professors.
=Sue banks for what?=
Same thing that Houston, San Francisco, and a bunch of other cities did–the toxic swaps.
The premise that CTU elections could affect anything is pretty laughable. There used to be several caucuses in the CTU, but when Karen Lewis routed UPC and PAC was basically done when Debbie Lynch left CPS. There is nobody really around to run against the current crew. Certainly nobody they’d worry about.
- Tone - Wednesday, Mar 23, 16 @ 12:47 pm:
Please explain, these lawsuits against a bank providing an interest rate swap.
- Four more - Wednesday, Mar 23, 16 @ 1:15 pm:
The CTU has made a habit of selling easy answers, to both it’s members and Chicago voters. That’s why Lewis couldn’t get the big bargaining team to okay the tentative agreement she made with CPS. They keep waiting for the TIF fairy to fly in and solve all the financial problems.
This doesn’t get solved without a big tax increase and the teachers giving on something — likely the pension pick-up. Hard to get re-elected on that platform, whether your running for union boss or mayor.
- Tone - Wednesday, Mar 23, 16 @ 1:48 pm:
CPS has raised taxes by maximum allowed each year under Rahm. How much more money needs to go for under worked, overpaid, poorly performing emoployees?
- Blue dog dem - Wednesday, Mar 23, 16 @ 2:08 pm:
Bankruptcy.
- JS Mill - Wednesday, Mar 23, 16 @ 2:51 pm:
@Word- We are all getting our GSA but not MCAT’s. The gov, Supt Smith, Sec. Purvis have all been oddly silent on MCAT’s and the do matter even when some (the biggie) have quietly been reduced by 55%.
- RNUG - Wednesday, Mar 23, 16 @ 4:11 pm:
== I wonder what the pension funds and other creditors will get when a bankruptcy judge orders sales of city assets, like O’Hare and Midway. ==
If bankruptcy were legal (it isn’t), based on what happened in Detroit or looks likely in Puerto Rico, the pensions will be made mostly whole or entirely whole while the bondholders take a major haircut.
What is more likely would be something like what happened when East St Louis couldn’t satisfy a court judgement; the winner ended up owning City Hall and collecting rent. Imagine the various Chicago pension funds owning the airport and tollway revenues with the city stuck with all the expenses as a result of a court order.
- Sue - Wednesday, Mar 23, 16 @ 5:29 pm:
So why is anyone surprised. This is what happens when 25 plus percent of our available revenue goes into pension costs.
- Chris - Wednesday, Mar 23, 16 @ 5:48 pm:
What claim would any school district have on any municipality’s assets? How does CTPF get to ORD????
- Tone - Wednesday, Mar 23, 16 @ 5:51 pm:
Chris, CPS doesn’t get to ORD. Witness the head in the sand crowd in its full glory.
- Tone - Wednesday, Mar 23, 16 @ 5:53 pm:
Sue, the only people who appear surprised are the usual suspects of public employee unions and Madigan drones.
- wordslinger - Wednesday, Mar 23, 16 @ 6:10 pm:
–Chris, CPS doesn’t get to ORD.–
Whatever that means.
Tone, you seem to be under the impression that merely filing municipal bankruptcy allows you to walk away from all sorts of things, no questions asked.
Did you read that in one of Sandack’s comic books?
Believe it or not, in such a situation, creditors have the right to respond to the filing, and point out revenue streams and assets that might be tapped before they have to take a haircut.
A judge decides.
- Sue - Thursday, Mar 24, 16 @ 3:53 am:
CTU’s standard answer- we are reasonable and all we need is another stream of tax revenue. At some point our unions will run out of pockets to pick. CPS might as well go ahead and officially end the pick up because the Union is never going to agree and delay is simply accelerating the burn rate on their dwindling cash