CPS running on fumes
Wednesday, May 4, 2016 - Posted by Rich Miller
* From Aldertrack…
Officials at Chicago Public Schools laid out a “dire financial situation” for aldermen at briefings Monday and Tuesday: not only will the district need a school funding reform passed through Springfield, it also needs aldermen to file an additional property tax levy to address its cash crunch, slated to hit this summer. The district projects by June 30, it will have only $24 million cash on hand, enough to cover a day and a half of expenses, according to an 11 slide powerpoint deck provided to Aldertrack.
The district is already “borrowing on a credit card” to address its cash flow needs. It has an $870 million line of credit that expires in August. In order to cover costs for the next school year, CPS would need to renew that $870 million line of credit, but it can’t do so without a Fiscal Year 2017 budget and a new property tax levy. “Banks will only lend if they see a balanced budget with meaningful progress to structural balance and positive projected cash flows for FY 2017,” the powerpoint says.
CPS is scheduled to release that FY 2017 budget later this month, and school officials said it will need help from the Chicago Teachers Union (CTU), Springfield, and the city to close a yawning $1.1 billion structural deficit: “[it] will require shared commitment from all parties, starting with Springfield in the form of both pension parity and equitable funding; a contract with CTU that is fair to teachers, students and taxpayers; and the restoration of the pre-1995 property tax levy.” […]
During the briefings, CPS officials outlined a plan dependent on the General Assembly passing funding reform and Gov. Bruce Rauner signing it into law. CPS would then ask City Council to approve a $142 million property tax levy devoted to CPS capital improvements. City Council has a separate property tax levy it can raise for CPS capital spending–last October, aldermen approved a $45 million levy, though they demanded CPS regularly report on what projects that money would be spent on.
“They’re not asking us to do that yet, they’re counting on Sen. Andy Manar and [State Rep.] Christian Mitchell’s bills,” said Council Education Committee Chair Howard Brookins, Jr. “But nobody, including CTU, believes there will be a permanent fix to anything until June 2019, when Rauner will be out office.” [Emphasis added.]
Yeah, well, what if Rauner is reelected?
It’s past time to come up with a plan here. Hope ain’t working.
- Ares - Wednesday, May 4, 16 @ 2:44 pm:
Cut the charter school and TIF subsidies - that would make a good start. Rauner and friends should fund their charter schools out of their own ample pockets.
- Carhartt Representative - Wednesday, May 4, 16 @ 3:02 pm:
Charters do cost CPS $700,000,000 per year it can’t afford, but with the charter commission even if CPS said no to a charter, the state could not only overrule them, but make them pay more to operate the charter.
Network Offices are another $300,000,000 that doesn’t provide a whole lot of value. Principals would be thrilled to cut and consolidate them.
- Ghost - Wednesday, May 4, 16 @ 3:09 pm:
they could get a line of credit from lucas in exchange for hos preferred location…..
- Not It - Wednesday, May 4, 16 @ 3:29 pm:
I know it is convenient for Aldermen to blame all this on Rauner, but he has only been Governor for 15 months. These problems took more than 15 months to create.
- Cassandra - Wednesday, May 4, 16 @ 3:34 pm:
When Chicago, a very wealthy global city, raises its property taxes to the highest level of those in surrounding suburbs, then we can talk about funding from “the state.”
Amazing that Chicago pols, Democrats all, continue to pretend they haven’t noticed the big gap between Chicago’s property taxes and those of its suburbs. We suburbanites, barely able to afford our homes, should just pull out our wallets?
- RNUG - Wednesday, May 4, 16 @ 3:35 pm:
Don’t see any help coming from Springfield dince it is likely the Stste will be cost-shifting the downstate peneion obligstions to the locsl districtd. CPS is on thier own. For starters, they need to consolidate the half full charter schools, and then close the unneeded half. Lots of money being wasted there.
Even knowing the charter game is rigged and hard to close / consolidate, CPS should take a play right out of Rauner’s book and just not fund the charters for a year because the limited money is needed for the rest of the schools.
- JustRight - Wednesday, May 4, 16 @ 3:43 pm:
File bankruptcy like any other bankrupt organization. CPS/CTU don’t know how to live within their means.
- Precinct Captain - Wednesday, May 4, 16 @ 3:44 pm:
==- Cassandra - Wednesday, May 4, 16 @ 3:34 pm:==
Ford Heights level alright with you?
- From the 'Dale to HP - Wednesday, May 4, 16 @ 3:45 pm:
CPS has reached the point where the connected can’t be protected any more. It’s going to be painful, it’s going to tick off some elected officials, it’s going to tick off the buddies of elected officials, and it’s going to cost a lot of people their jobs… but the gig is up. Borrowing, again, to get through the year just to protected a few sacred cows isn’t the answer. It’s 5:10am on Sunday morning and the lights just came on at Beaumonts… party is over.
- BigDoggie - Wednesday, May 4, 16 @ 3:48 pm:
Amen Cassandra. Also, that darned Bruce Rauner. How many more years will he be responsible for leading the CPS down this path of financial ruin?! Clearly it’s all his fault.
- Maximus - Wednesday, May 4, 16 @ 3:50 pm:
This looks dire. Presuming CPS ends up being unable to come up with enough cash, how does this play out? I dont believe they can officially declare bankruptcy but they arent paying their bills so now what? Who gets paid and who doesnt? I believe Detroit Public School system is struggling in the exact same fashion right now.
- Christopher Ball - Wednesday, May 4, 16 @ 3:56 pm:
The reason property taxes are so high in the suburbs is because the state pays so little for public education compared to the rest of the country. Illinois is consistently the bottom or near the bottom of the state share of K12 funding. Property taxes could be reduced for suburbs if the funding was improved.
No doubt CPS put itself into its fiscal hole by failing to contribute to pensions adequately since 1995. But at the same time, the GA had committed to funding a greater share of CTPF contributions in the late 1990s, which it never did.
There is only limited savings from closing charters. Certainly it would help on administrative costs, but the district would need to hire teachers if more students returned to neighborhood school classrooms. So the amount spend on charters would not be saved dollar for dollar.
- BK Bro - Wednesday, May 4, 16 @ 4:05 pm:
@Maximus: similar situation going on right now in Puerto Rico. They’re in (or on the verge) of practical bankruptcy, but they don’t have the legal status of “bankruptcy.” Puerto Rico is trying to not pay some of the bondholders. Bondholders will file lawsuits because their bond proceeds are based on credit (tax revenue) of Puerto Rico. That is when the battle between who gets paid first/when/how will start. Gov employees of Puerto Rico will say they have first dibs, bondholders likewise. Even without legal BK, BK happens anyways. If anything, the defacto BK without designation is way more messy than just allowing Puerto Rico (and CPS for that matter) declare BK and bring order to the process. It’s going to happen.
- lake county democrat - Wednesday, May 4, 16 @ 4:14 pm:
The charter schools play a role in keeping middle class families in Chicago rather than moving to the suburbs. It’s the same dynamic as in this NPR story about magnet schools: https://www.wbez.org/shows/wbez-news/chicagos-middle-class-not-interested-in-hidden-gem-high-schools/4efdc6c2-6569-42f0-a0a3-f4a972209c53
- Ares - Wednesday, May 4, 16 @ 4:22 pm:
Charter schools spend (public) money in ways that would put a public school administrator in prison, if he / she did it. What about TIF support?
- Mike Fourcher - Wednesday, May 4, 16 @ 4:24 pm:
Something we did not include in our article (because we’re harped on it a million times for subscribers) is that CPS is, by state law, already close to its tax cap. Next year it will only be able to raise an additional $19M. Thus, Springfield is keeping it from self-funding.
- burbanite - Wednesday, May 4, 16 @ 4:33 pm:
I rarely agree with her, but I gotta go with Cassandra here, my property tax rate is 9%, Chicago needs to get with the program. Why should My property tax rate is 9% while Chicago’s rate was I think 2% and we all pay the same artificially low income tax rate. Lots of people with big bucks in Chicago too. Hey doesn’t the Governor have a place there?
- Formerpol - Wednesday, May 4, 16 @ 4:37 pm:
There is no spending discipline at CPS. Nothing will ever change or improve.
- Steve - Wednesday, May 4, 16 @ 5:27 pm:
Who knew Bruce Rauner controlled so many votes on Chicago’s City Council and the CPS board?
- wordslinger - Wednesday, May 4, 16 @ 5:36 pm:
– I dont believe they can officially declare bankruptcy but they arent paying their bills so now what?–
What bills aren’t they paying? You must be confusing CPS with the State of Illinois.
That aside, aren’t we lucky we’ve had all that good gravitas from Daley/Emanuel all this time?
They’ve done a swell job, running those schools they wouldn’t even think of sending their own kids to.
What a shock — look what happens when the decision-makers have no skin in the game, for decades.
Chicago might have to pony up and pay for their schools. Such a revolutionary concept.
And before you can say, “people will flee,” tell me where are they going to go?
You want to pay my property tax rates in Oak Park? Evanston? Hinsdale? Downstate? The hard numbers laugh at you.
Tell me where they’re going to flee to, over property tax rates.
- Macbeth - Wednesday, May 4, 16 @ 6:18 pm:
I live in a far western suburb where my property tax is 11%.
So, yeah, Chicago can handle it. There’s no issue here. Move along.
- Hit or Miss - Wednesday, May 4, 16 @ 6:28 pm:
===Why should My property tax rate is 9% while Chicago’s rate was I think 2%===
The most recent report from Cook County Clerk David Orr shows the Chicago property tax rate to be 6.8%, the lowest in all of Cook County. The average rate is 10% in the north suburbs and the average rate is 13% in the south suburbs. The highest property tax rate in the county is 38.4% in Ford Heights.
For the Chicago property tax rate to become just average for the county as a whole it would need to increase by about 1/2 it current value.
- Do the math - Wednesday, May 4, 16 @ 6:53 pm:
listen to Lewis’ rhetoric and tone for one minute and Cps will have their bailout answer from people outside of Chicago.
- Carhartt Representative - Wednesday, May 4, 16 @ 8:09 pm:
==The charter schools play a role in keeping middle class families in Chicago rather than moving to the suburbs. It’s the same dynamic as in this NPR story about magnet schools: https://www.wbez.org/shows/wbez-news/chicagos-middle-class-not-interested-in-hidden-gem-high-schools/4efdc6c2-6569-42f0-a0a3-f4a972209c53==
No, it’s not. People clamor to get into magnet schools. Charter schools take advantage of poor families. Middle class families avoid them like the plague.
- wordslinger - Wednesday, May 4, 16 @ 10:04 pm:
–No, it’s not. People clamor to get into magnet schools. Charter schools take advantage of poor families. Middle class families avoid them like the plague.–
I remain amazed at how many people outside of the CPS system (and I am one of them) continue to think “magnets” and “charters” are the same thing.
You want to see something Rauner/Emanuel/Madigan and the other “leaders” can all agree on? They’re all proven charter school schemers. They can smell the meat-a-cookin’.
(That’s a Paul Powell reference, for all you young political types out there. If you don’t know who Paul Powell was, the google is your friend).
Diane Ravitch, an HW federal education honcho from Texas and former proponent of charters, remains the goods for a sober assessment of their mixed educational record contrasted with the big score they represent for cheap hustler politicians and Wall Street types cashing in on the K-12 money train.
And she’s got a Bruce Rauner story that will curl your toes. Again, the google is your friend.
- Lurker - Thursday, May 5, 16 @ 12:06 am:
We can have plenty of debate about the role and effectiveness of charters — but none of it has to do with the budget. At CPS, charters get the same per pupil rates as every other school — and from that stipend charters pay for their teachers, administrators, contractors, computers, whatever…including pensions. If we close all charters, those kids go to neighborhood schools and that money goes with them. You’re only saving money in that scenario if you’re slashing budgets at neighborhood schools.
- Carhartt Representative - Thursday, May 5, 16 @ 8:09 am:
=We can have plenty of debate about the role and effectiveness of charters — but none of it has to do with the budget. At CPS, charters get the same per pupil rates as every other school — and from that stipend charters pay for their teachers, administrators, contractors, computers, whatever…including pensions. If we close all charters, those kids go to neighborhood schools and that money goes with them. You’re only saving money in that scenario if you’re slashing budgets at neighborhood schools.=
That’s not at all true. In many cases CPS is paying a charter school to operate across the street from a CPS school. Operating two competing businesses next door to each other is going to cost you money. As the population of the city has gone down, the number of schools has exploded.
- Tone - Thursday, May 5, 16 @ 8:18 am:
“- Macbeth - Wednesday, May 4, 16 @ 6:18 pm:
I live in a far western suburb where my property tax is 11%.
So, yeah, Chicago can handle it. There’s no issue here. Move along.”
So, are you telling me that if your home is valued at $100,000 you are paying $11,000/year?