37 Comments - Big Muddy - Wednesday, Dec 7, 16 @ 3:15 pm: CPS is bankrupt. So is the state. No hypotheticals needed. All you need to know is how to read a balance sheet. - Oswego Willy - Wednesday, Dec 7, 16 @ 3:18 pm: The tax rate in Chicago dedicated for Chicago schools will allow a judge to look at where CPS isn’t getting revenue and ask why the rates are lower than the rest of the state. Just like pensions, the revenue answer IS the answer, sadly. … with drastic cuts. Leadership is hard. - 47th Ward - Wednesday, Dec 7, 16 @ 3:21 pm: ===CPS is bankrupt=== Sigh. BM, do you understand the difference between someone who CAN”T pay his debts versus someone who doesn’t WANT to pay his debts? One is bankrupt. The other is a coward. - Deft Wing - Wednesday, Dec 7, 16 @ 3:24 pm: Big Muddy, right on. But reading, let alone understanding, a balance sheet ain’t typically in the governing Democrats’ lexicon. So their bond counsel had to put the potential of a filed bankruptcy — through a change in statute — in the prospectuses as an enticement to buy these (different than CPS’ GO) bonds! They are running out of gimmicks. Fast. - Kyle Hillman - Wednesday, Dec 7, 16 @ 3:30 pm: Considering the fact our Governor appears to have tried to “sabotage” previous bond offerings - I don’t blame them for including this. - Whatever - Wednesday, Dec 7, 16 @ 3:31 pm: ==So their bond counsel had to put the potential of a filed bankruptcy — through a change in statute — in the prospectuses as an enticement to buy these (different than CPS’ GO) bonds!= It is a gimmick, but it isn’t as you describe it. Any prospective buyer would have to be aware of the possibility of a change in Illinois law to allow CPS to file for bankruptcy, which will drive up the required return on any bonds. This is a gimmick to assure prospective purchasers that they don’t have to worry - the existing bondholders will be the ones who take the hit. - Big Muddy - Wednesday, Dec 7, 16 @ 3:37 pm: 47, Pretty soon you run out of other people’s money. Chicago and Illinois politicians have been spending for decades with no regard for how deep they would have to go into people’s pockets to eventually cover it. Not enough revenue can be raised to both bail out and keep pace with the outflows of cash from Chicago and the state. Greece-like austerity measures in three… two… one… - JS Mill - Wednesday, Dec 7, 16 @ 3:44 pm: =But reading, let alone understanding, a balance sheet ain’t typically in the governing Democrats’ lexicon.= As someone that does not identify with either party I can state with out reservation that the aforementioned is more nonsense and hackery from the guy that can’t produce. PS- your governor and ILGOP puppets cannot find his spreadsheet much less read one. =Sigh. BM, do you understand the difference between someone who CAN”T pay his debts versus someone who doesn’t WANT to pay his debts? One is bankrupt. The other is a coward.= THIS is spot on. This is someone who definitely “gets” it. Well stated @47th Ward. That is how you do it DW. Any time you want to send that budget over, you just go ahead and do it. - 47th Ward - Wednesday, Dec 7, 16 @ 3:46 pm: Another citizens heard from. Whatever happened to “We the People?” ===Not enough revenue can be raised to both bail out and keep pace with the outflows of cash from Chicago and the state.=== I see you flunked math too. No wonder you hate the schools. - Hit or Miss - Wednesday, Dec 7, 16 @ 3:50 pm: CPS needs to consider three options before they consider the bankruptcy option: 1) reopen the contract recently signed with the CTU with its pay increases, 2) layoffs, and 3) a property tax increase. An additional bond offering will be costly and not solve the financial problem that the CPS has. CPS needs to make the hard financial decisions that it has desperately tried to avoid making for years. - Big Muddy - Wednesday, Dec 7, 16 @ 3:51 pm: 47, How about I just sign everything over to you? Would that be enough? My business, my 401k, all my assets that I have built up over 60 years. Just take it all to appease the free-spending, crappy service providing, terrible at educating, political class protecting scam that is CPS, Chicago and state government. Jeez, man. It’s attitudes like yours that got Trump elected. People are fed up with all this. - JS Mill - Wednesday, Dec 7, 16 @ 3:52 pm: =Greece-like austerity measures in three… two… one… = Illinois’ GDP is $764 billion and ranks 21st in the WORLD. Greeces GDP is $195 billion and ranks 75th in the world, just a little above Iowa. Given that Illinois’ economy is 4 times more productive than Greece, I would say you are engaging in a false comparison and have entered the alt. right post truth world (tip of the cap to Norseman). BTW- If you add Indiana, Wisconsin, and Kansas together they are still smaller than Illinois. Ahh, the ILGOP dream. - Sue - Wednesday, Dec 7, 16 @ 3:55 pm: Federal vouchers will soon be available after January 20 allowing minority students a real alternative to the crappy schools in the inner cities. Wouldn’t be buying CPS bonds anytime soon - lake county democrat - Wednesday, Dec 7, 16 @ 3:57 pm: People forget how Karen Lewis urged the City to simply reneg on the “toxic swaps” (see her Crain;s op ed during the mayoral election) Even if the CPS would be a “coward” for going the bankruptcy route if it were permitted to (no argument), there’s a good chance the kids and most city residents benefit. It’s complicated and RNUG was very helpful in explaining how it might play out, but 1) even with the Detroit example he cited to, CPS would still shed tons of debt and could renegotiate contracts, 2) the Detroit case isn’t binding and different judges could see things differently and 3) the SUpreme Court is hearing a case regarding which creditors get prioritized in bankruptcies - not sure if it would impact a local government bankruptcy. The point is this is grey, not black and white. A lot of good teachers and other sympathetic parties would be hurt, but so would a lot of those evil big banks. - Big Muddy - Wednesday, Dec 7, 16 @ 3:59 pm: JS, Interesting facts. They really are. However, I was providing an analogy (or is it a simile?) I can’t give any more money to government. Taxes, license fees, property taxes, income taxes, none of it. I’m tapped out. CUT SOMETHING! - 47th Ward - Wednesday, Dec 7, 16 @ 4:01 pm: BM, you’re a real victim aren’t you? I remember when CapFax attracted knowledgeable insiders, not disgruntled hucksters. Just pay your fair share pal, like I’m doing, and take some responsibility for your government. You aren’t actually helpless, you’re only whining like a baby. Do you even live in Chicago? - Blue Bayou - Wednesday, Dec 7, 16 @ 4:01 pm: Sue, since poverty is the #1 issue with low-performing schools and test scores, how are charter schools going to fix that? - Sue - Wednesday, Dec 7, 16 @ 4:07 pm: Blue- explain why Charters tend to outperform. Perhaps it’s the difference in teacher quality and adherence to both education and behavioral standards. There is a reason minority parents want the alternative and why the Unions hate Trumps education secretary - JS Mill - Wednesday, Dec 7, 16 @ 4:08 pm: =Federal vouchers will soon be available after January 20 allowing minority students a real alternative to the crappy schools in the inner cities.= This qualifies as “Fake News”, but nice try. You don’t have the slightest clue what you are talking about other than DeVos is a plutocrat that knows nothing about public education but loves her some vouchers. Share with me the federal funding source for the vouchers. I know what they want to do, do you? - Big Muddy - Wednesday, Dec 7, 16 @ 4:10 pm: 47, My body armor doesn’t protect me from the caliber, or volume, of lead you have flying around in Chicago so you are correct in your assumption that I don’t get to Chicago too often. I’m willing to bet you are either part of the political class or a union member so I understand you have to protect your revenue stream. It is in your best interest to do so. What is in my best interest is to get out of Illinois and take my business and jobs with me. You do what you gotta do to save your neck, I’ll do the same. Have fun paying the tab on all the spending and bills racked up over the past 20 plus years on your own. Peace, Big Muddy - JS Mill - Wednesday, Dec 7, 16 @ 4:11 pm: @BM- It is a simile (uses like or as). On a federal level your taxation is near an historic low. Look back at rates pre 1991. Property tax- depends where you live. Illinois’ over all level of taxation is middling nationally so pick your poison, stuff gets paid for anywhere you go. Hyperbole aside, you really have to get a grip and drop/question the false narratives you are forwarding. Do the math and see what your % really is. - lake county democrat - Wednesday, Dec 7, 16 @ 4:18 pm: Charter schools is complicated too (and depends a lot on the model, of course), but research seems to indicate an advantage for minority students. But look, Karen Lewis and CTU indicated they don’t care what the research says when she vowed never to let the “Freakonomics” model of merit pay be tried again even when it was successful in a run in Chicago Heights. Here’s a NYTImes article on the Supreme Court bankruptcy case I mentioned: ttp://www.nytimes.com/2016/12/06/business/dealbook/supreme-court-case-has-bankruptcy-world-on-edge.html?_r=0 - Sue - Wednesday, Dec 7, 16 @ 4:21 pm: JS- perhaps you missed the recent article in the Trib-out of the largest 100 cities- Chicago and surrounding suburbs are deadlast in terms of our housing market. I am sure there are strong pockets- but overall- they predict we will be deadlast next year - few people wZnt to relocate here and the job market has zero growth. How much less attractive should we try for-GEEZ - Big Muddy - Wednesday, Dec 7, 16 @ 4:22 pm: Been in business in Illinois for 32 years and I have people telling me I am providing a false narrative when I inform them that businesses, at least mine, can’t afford all the costs of government in Illinois anymore? When I look to the future costs it gets worse. I’ve done the math. - Deft Wing - Wednesday, Dec 7, 16 @ 4:23 pm: Oh, it’s a gimmick alright. Because that’s all CPS has left these days … unless they want to go and levy another property tax directly upon City residents. If not that, then do so via an indirect tax through the tried and true trick bag! This slight of hand asserts, essentially, these bonds are “bankruptcy proof” because there’s a designated revenue source specifically for re-payment if CPS defaults; one that ostensibly won’t be disturbed under substantive state law or the Federal Bankruptcy Rules. Of course, in the end these additional bonds are backed by the full faith and credit of the taxpayers of Chicago … who ain’t done paying given the massive debt accumulated by CPS and the City. - Blue Bayou - Wednesday, Dec 7, 16 @ 4:37 pm: Sue, they sometimes “outperform” because they choose students and are under no obligation to take all students. When they have better numbers, it’s because they have a more select population. Do you have kids in CPS? Are you an educator? - Blue Bayou - Wednesday, Dec 7, 16 @ 4:39 pm: Sue, link to that Trib article on housing prices? Thanks in advance. - RNUG - Wednesday, Dec 7, 16 @ 4:58 pm: == CPS is bankrupt. So is the state. No hypotheticals needed. All you need to know is how to read a balance sheet. == Actually, they both are not bankrupt but are insolvent by CHOICE. Some of those choices were made in the past; some of those are current choices. Choices to misdirect revenue, choices to not cut spending, choices to not increase revenue … all CHOICES made by elected officials. So now the current elected officials will have to finally made the HARD CHOICES to both cut spending and raise revenue while still honoring their debt. Nobody is going to be happy, but it can be done … as long as you recognize it will take thirty or forty years to dig out, just like it did to dig the hole in the first place. - Rod - Wednesday, Dec 7, 16 @ 5:12 pm: I think the one thing all agree on is this new bond selling strategy will not impress either Fitch or S&P in terms of the CPS bond rating. I am amazed CPS is still trying to float capital bonds given the situation it is in, basically using a line of credit to cover short falls every few months. My understanding is also at the CPS Board meeting today there was no agenda point on the new CTU contract for approval but only a closed session discussion of it, what that means I really don’t know see http://www.cpsboe.org/content/documents/v.2_public_agenda_to_print_december_7_2016_pdf.pdf - blue dog dem - Wednesday, Dec 7, 16 @ 5:40 pm: 17 electoral votes and counting. - north shore cynic - Wednesday, Dec 7, 16 @ 6:02 pm: I would like to know the name of the bankruptcy who will order bondholders paid before teachers. WON’T HAPPEN - Deft Wing - Wednesday, Dec 7, 16 @ 7:23 pm: –”17 electoral votes and counting.”– And declining, still. - Johnnie F. - Wednesday, Dec 7, 16 @ 8:16 pm: “17 electoral votes and counting” Especially with all those newly unemployed social service workers and university staff leaving the state. - Blue dog dem - Wednesday, Dec 7, 16 @ 9:10 pm: Johnnie. You bet. The downward spiral continues. - City Zen - Wednesday, Dec 7, 16 @ 10:02 pm: ==Actually, they both are not bankrupt but are insolvent by CHOICE…Choices to misdirect revenue, choices to not cut spending, choices to not increase revenue … all CHOICES made by elected officials.== I would wager the majority of insolvencies are a result of choice. - wordslinger - Thursday, Dec 8, 16 @ 12:01 am: –Federal vouchers will soon be available after January 20 allowing minority students a real alternative to the crappy schools in the inner cities. – Sweet. So, on a related subject… JD or Maker’s Mark and what time in the morning do you start? Because I’ve got to party with you, wild thing. - lake county democrat - Thursday, Dec 8, 16 @ 8:30 am: North Shore Cynic - all the more reason to declare bankruptcy: better the bondholders dig CPS out of the hole than taxpayers, right? Sorry, comments for this post are now closed.