* With thanks to Tony Sanders, the CEO of Elgin School District U-46, here’s a side-by-side comparison of SB1 and the governor’s amendatory veto. This was put together by proponents of SB1, so keep that in mind. If you need a better copy, click here or on the pic…
FITCH: ILLINOIS VETO JEOPARDIZES SCHOOL FUNDING AND RATINGS
Fitch Ratings-New York-02 August 2017: Illinois Governor Rauner’s veto of Senate Bill 1 (SB1) creates uncertainty as to whether or not Illinois school districts will receive state aid prior to opening for the new school year. Should there be an extended impasse, ratings for the Chicago Board of Education (Issuer Default Rating ‘B+’/Negative Outlook) and other Illinois school districts with limited financial flexibility could be at risk, according to Fitch Ratings. The state budget for fiscal 2018, which was enacted through override of the governor’s veto, made school funding contingent upon legislative passage of a new evidence-based formula for distributing school aid. SB1, which meets that requirement, will now return to the legislature for further consideration. Among other adjustments, the governor’s changes limit the increase in funding to Chicago Public Schools (CPS) by removing from the formula a $250 million block grant that the district has historically received and also cutting CPS pension considerations. The governor’s action would include putting monies required to fund CPS’s normal pension cost in statute instead. Any other aid would require additional legislation, perhaps making it vulnerable to separate budget appropriation this year and in the future.
Although the dispute between the legislature and governor is focused on funding to CPS, the veto threatens the timeliness of the first distribution of general state aid to all K-12 school districts, which is set in statute for Aug. 10. Following a veto, the bill must be read again into the record in the state senate the next time it is in session. The legislature then has 15 days during which it faces three options. First, the house and senate can both agree to the governor’s changes; this seems unlikely given the rancour of the debate. Second, the legislature can override the governor’s veto with a super-majority vote. This also seems unlikely despite the override of the governor’s veto of the fiscal 2018 budget. The budget crisis brought bipartisan agreement to a solution in a way that the school funding formula may not. The third option is to allow the bill to lapse and begin again, likely extending past the first distribution date on Aug. 10.
Resistance among key stakeholders and an absence of consensus create a political environment that remains a negative consideration for the state. A return to political gridlock specifically related to school funding puts at risk the ability of school districts to open all of their schools with a full complement of services. This is a notable difference from the state’s fiscal behaviour during its extended budget impasse, during which it consistently appropriated funds for schools and prioritized those payments in its cash flow management. Nevertheless, delayed distribution of school funds would not have a near-term negative effect on the state’s ‘BBB’ Issuer Default Rating. The current Negative Outlook is unrelated to school funding and instead reflects uncertainties related to achieving the revenue and spending assumptions in the fiscal 2018 budget. Delayed distribution may, however, have a negative impact on school district ratings. Some districts should be able to weather a state aid delay by relying on reserves or by short-term borrowing, but others, notably CPS, have much more limited flexibility. Fitch will closely monitor the potential impact an extended impasse may have on Illinois school district credit quality and will take action on a case by case basis as necessary.
Though Gov. Bruce Rauner says his amendatory veto of a state school aid bill is designed to keep Chicago Public Schools from grabbing money that should go to other districts, his rewrite actually potentially dings hundreds of other communities statewide and would shift resources away from the neediest. Downstate schools could be particularly hurt.
That’s the bottom line of a preliminary analysis of Rauner’s action by Illinois Senate Democratic staff, which also concludes that the veto would poke a $221 million hole in the just-approved state budget. The analysis was distributed to Democratic senators a bit ago, and a copy passed on to me.
Overall, the document suggests the governor didn’t just amend a measure revamping the formula used to give more than $5 billion a year to local grade and high schools, but effectively rewrote it in a complex fashion that will take some time to unravel.
In a statement, Rauner’s spokeswoman denied that the amendatory veto creates a budget hole or that it will cut funding for any district in fiscal 2018 compared to fiscal 2017.
• SB 1 holds all districts harmless, using FY 17 as a base year. The governor’s amendatory veto provides only a 3-year district level hold harmless. Beginning with the 2020-2021 school year, any district that loses enrollment would lose funding. 222 districts lost enrollment from FY 15 to FY 16.
• SB 1 includes a Minimum Funding Level that is intended to distribute funds more progressively to districts furthest from adequacy in the case of appropriation lower than the MFL. In SB 1, the MFL was $350 million. The governor’s amendatory veto r emoves the Minimum Funding Level (MFL) entirely.
• SB 1 includes a Regionalization Factor to account for the varying costs of education students in different parts of the state. The governor’s amendatory veto places a cap on the Regionalization Factor of 1.04. SB 1 only contained a floor of 0.9 and did not have a cap. A regionalization cap would reduce the adequacy target for 313 districts. This includes every district in Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry, and Will counties.
• SB 1 includes a number of provisions to account for the rising cost of education for districts. The governor’s amendatory veto removes these escalators (teachers, school support personnel, and adult basic education) for the adequacy target. Without inflationary measures, the adequacy target will fail to reflect the true cost of education, which is the purpose of the evidence based model.
• The governor’s amendatory veto also makes the following changes regarding TIF and PTELL:
• Counts TIF EAV as formula EAV. This would penalize districts because typically revenue from TIF EAVs is not accessible to districts.
• Removes adjustments for PTELL EAV. PTELL limitations would no longer be considered. This would have an impact on 70 districts throughout the state
CPS
• SB 1 provides CPS funding within district’s Base Funding Minimum to cover CPS’ normal pension costs. In FY 18, this is $221.3 million. The governor’s amendatory veto would no longe r include CPS’ normal cost in the base funding minimum. Instead, the governor is adding language to the pension code that provides a contribution of $221.3 million for CPS’ normal cost in FY 18 and establishes a continuing appropriation Chicago teacher normal pension costs in future years.
• SB 1 reduces CPS’ Local Capacity Target by the amount of the district’s unfunded liability in a given year. The governor’s amendatory veto removes this language entirely.
• SB 1 increases CPS’ Adequacy Target by the amount of the district’s normal pension cost in a given year. The governor’s amendatory veto does not remove this provision. However, it does remove language that would apply this language to other school districts if a statewide pension cost shift were to occur and local districts became responsible for paying that cost.
• SB 1 sunsets the Chicago block grant for line items not included in evidence based funding, but holds CPS harmless for the $203 million impact to the district as a result of the sunset. In the future CPS would submit claims for reimbursement like all other districts. The governor’s amendatory veto repeals the block grant and does not hold CPS harmless for line items not consolidated into the new formula. This would drive an additional $203 million through the tiers of the EBM.
EFFECT ON ENACTED FY 18 BUDGET
Absent any change to the enacted FY 18 budget, the amendatory veto will (i) drive an additional $424.3 million through the EBM distribution formula (above the $350 million anticipated), and (ii) increase overall state spending by $221.3 million
* Says the guy who once sent a pollster a dead fish…
Mayor Rahm Emanuel on Wednesday accused Gov. Bruce Rauner of “governing through anger” and predicted that Republicans and Democrats alike would chose “loyalty to kids over loyalty to the governor” by overriding Rauner’s veto of a school funding bill.
One day after Rauner followed through on his threat to veto the bill, Emanuel accused his old friend of making a “fundamental mistake” and blowing a “historic opportunity” to rewrite a formula that “fundamentally harms poor kids and kids of color.”
“Re-writing the school formula was a product of the governor’s commission, which is why the governor agrees with 90 percent of it. You can’t then just want to veto it because of a pique of anger,” the mayor told reporters.
“There’s only one way to explain what the governor did. Vetoing a bill that he agrees with 90 percent that almost every school superintendent across the state and almost every paper across the state….agree that he should sign. He is governing through anger.”
But, this does further the theme, pounded home by Senate President Cullerton, that the governor may have some anger issues. And videos like this certainly don’t help…
Today, Chicago Foundation for Women, Voices for Illinois Children, and Loyola University’s Center for Urban Research and Learning released a new report detailing how Bruce Rauner’s 736-day budget crisis hurt women and children across the state.
Here are some of the ramifications of Bruce Rauner’s failed leadership:
* 7,800 victims of domestic violence were left without shelter.
* The state racked up bills forcing social service providers to wait an average of eight months for payments.
* Social service providers had to lay off workers and reduce services.
* The number of women receiving lifesaving breast and cervical cancer screenings dropped by 34 percent.
* 90 percent of homeless shelters had to reduce services or cut staff.
* 30,000 children no longer qualify for child care assistance.
“Bruce Rauner decimated the services that help women and children build better lives, and it’s clear that the damage is done,” said Pritzker campaign spokeswoman Jordan Abudayyeh. “Families were forced to suffer because Rauner treats people like numbers on a spreadsheet and families as pawns in his political games. Women and families deserve a leader that will fight for them, not for a political win.”
Education leaders and editorial boards across the state are rebuking Bruce Rauner’s reckless veto of Senate Bill 1. From the Quad Cities to Belleville, Peoria, Rockford, Bloomington, and Springfield, Rauner is getting blasted for his recently debunked claim that SB 1 is a Chicago bailout and for vetoing a bill that ensures all Illinois schools open on time with the funding that they need.
Here’s what Illinoisans are reading across the state about Rauner’s school funding veto:
“SB1 is the closest we’ve ever come to fixing that formula to more fairly serve and support all students.” — Elgin School District U46 CEO Tony Sanders
“Nobody knows when we’re going to get money now.” — East Aurora School District 131 Assistant Superintendent for Finance Mike Prombo
“We’ll be on fumes heading toward September.” — West Aurora School District 129 Superintendent Jeff Craig
“It’s just not what should be on the minds of parents and folks who serve kids through schools.” — Belleville District 118 Superintendent Matt Klosterman
“It’s just another thing that’s going to derail us, going through how we will have to do business differently until they get their act together.” — Triad District 2 Superintendent Leigh Lewis
“We’ve been watching and hoping that everything would work itself out, but I’ve been prepping the board for the worst-case scenario.” — Collinsville Unit 10 Superintendent Robert Green
“We have health insurance, power bills and other things that have to be paid and can’t be put off.” — Triad District 2 Superintendent Leigh Lewis
Bloomington District 87 Superintendent Barry Reilly wants the state to “get an evidence-based funding model in place, which is required in the state budget. Anything short of that is problematic for us all.”
So, is SB1 really a Chicago “bailout”? Just because a politician says something does not make it so, which applies to the governor like anybody else.
PolitiFact Illinois, in partnership with the non-partisan Better Government Association, rates Rauner’s “bailout” claim an unequivocal “false.” Meanwhile, a Chicago Tribune opinion page as pro-Rauner as any in the state has written that “the bill is not a CPS bailout. Repeat: It is not a CPS bailout” while calling SB1 “the best chance in more than 20 years to begin shortening the bridge between what wealthy school districts can spend and what low-income school districts can offer.”
If Democrats are not sinless in this unnecessary standoff, neither should Rauner get off the hook for fueling a very unhealthy Chicago-vs-the-rest-of-us balkanization that is too often knee-jerk and ignorant, from all sides. Last time we checked, Chicago is still within the boundaries of Illinois. Is a poor child there less deserving of an adequate and equitable education than one in Peoria?
“All of our children deserve to be treated fairly and be given the best education possible.”
Gov. Bruce Rauner’s tweet should have added “unless those kids live in the city of Chicago.” […]
SB1 is an evidenced-based model for how schools should be financed. There are adequacy targets and accountability measures that are meant to ensure that resources go to the schoolchildren who need them most. Staying true to the model helps drive student achievement, a goal we should all embrace. Some states have embraced the model, yet deviated from it, which has stalled student progress.
The governor’s amendatory veto disrupts the model and probably would derail student progress.
As promised, Gov. Bruce Rauner on Tuesday morning issued an amendatory veto of Senate Bill 1, a measure that would drastically change the way K-12 education funding is distributed in Illinois.
There’s no doubt reform is needed: The state has the most inequitable K-12 funding in the country. There is agreement on key aspects of what is needed in a new formula, including that it be evidenced-based and that new dollars dedicated to education go first to the neediest districts. SB 1 proposed doing both.
Not that Rauner was about to oblige them, or any of the other dozens of editorial boards, school superintendents and civic groups — up and down Illinois — urging him to sign Senate Bill 1. On Tuesday, as expected, he issued an amendatory veto of the bill, throwing education funding up for grabs weeks before schools are scheduled to open.
To our thinking — and we really are speaking for ourselves now — it’s a cryin’ shame. Illinois has had its fill of foolish stand-offs between the governor and the Legislature, and SB 1 is better than just a bill worth signing. It’s a historic chance to reform education funding, easing decades of financial inequities between rich and poor school districts.
“As Bruce Rauner continues to attack Chicago schoolchildren and mislead about SB 1, school districts and editorials across the state are blasting the failed governor,” said Pritzker campaign spokeswoman Jordan Abudayyeh. “No school district loses with SB 1, but all school districts lose with a governor creating lasting damage and leveraging schoolchildren to force his agenda.”
“As Bruce Rauner continues to attack Chicago schoolchildren and mislead about SB 1, school districts and editorials across the state are blasting the failed governor,” said Pritzker campaign spokeswoman Jordan Abudayyeh. “No school district loses with SB 1, but all school districts lose with a governor creating lasting damage and leveraging schoolchildren to force his agenda.”
A school district superintendent in southeast Champaign County supports Illinois Gov. Bruce Rauner’s amendatory veto of Senate Bill 1, the school funding bill. But Andy Larson with Unit Seven said he was frustrated that the issue has turned into a political game.
“It’s gets really frustrating when we are used as the biggest political pawn out there for everybody to get their own agendas taken care of,” he said.
And there are a bunch of stories that quote Republican legislators approving of the governor’s move (although, curiously enough, there was no roundup from the ILGOP today). Some outlets, like the SJ-R, ran headlines that focused on how Chicago got dinged, which probably goes over well with its readership.
Rauner was right to strip the CPS bailout and other bad elements from SB 1, but lawmakers should go even further and scrap SB 1 entirely. Beyond the CPS bailout, the “evidence-based” funding model within SB 1 will be an expensive failure.
Well, actually that paragraph has been deleted from the Institute’s website…
* There is no indication on the original story that it has been altered, so I e-mailed Ted Dabrowski, one of the authors, and asked why that paragraph no longer appears on his website. I haven’t heard back, but he tweeted this out ten minutes or so after I sent him my query…
SB1/No SB1 is a false choice. Lawmakers should keep the existing formula until an agreement can be reached. Don't use kids as pawns. #twill
Chris Kennedy spoke at the Mom+Baby governors candidate meet and greet yesterday. I didn’t see anything on his Twitter page about it, but I’m told about 30 moms and 10 kids had to wait at least half an hour for him to arrive. And it went downhill from there.
* Well, Mark Maxwell at WCIA TV interviewed some of those moms the other day…
“We’re sick and tired of being sick and tired.” A group of moms is setting out to change the political landscape in Illinois. We met them this week on Capitol Connection.
* In case you can’t watch video where you work, here’s a transcript of one of the moms describing the Kennedy meet and greet…
REPORTER: Rebecca Abraham is backing state Sen. Daniel Biss for governor after a meeting with Chris Kennedy left her with a bad impression.
REBECCA: And then he was very defensive when corrected. So it was kind of disrespectful that he wasn’t prepared and I wonder if he had met with a group of men who also were an activist group, I bet he would’ve came a lot more prepared. But because we’re called Mom + Baby and we’re a bunch of women with our children, he blew us off. So I don’t think he would’ve had the same behavior with a group of men.
Ouch.
* Meanwhile…
Chris Kennedy will attend the first annual Kankakee County John F. Kennedy Dinner as the keynote speaker. In his remarks, Kennedy will address his personal history of public service, his family’s legacy and his vision for the future of our state.
If one aspires to become a politician in Illinois, there’s one tried and tested route.
Attend private elementary and high schools.
Local Government Information Services (LGIS), which publishes the Sangamon Sun, researched the K-12 school choices of Illinois’ top elected officials– present and past– and found a clear, unmistakable trend.
They may politically support Illinois’ public schools, but an increasing number of elected officials are opting out of using them personally.
The LGIS report comes as Governor Bruce Rauner and Chicago Cardinal Blase Cupich are pushing a measure that would give a state tax deduction to philanthropists who underwrite private school scholarships for low-income and middle class students.
Many opponents of the measure attended private schools themselves.
As we discussed yesterday, private schools are pushing for a 100 percent state income tax credit on donations to scholarship funds for low-income students. So, if somebody gives $20K to a scholarship fund, that person’s state income tax bill will be lowered by a corresponding $20K. At the moment, the governor and other proponents want a $100 million program.
This new tax credit will not allow parents to receive a 100 percent tax credit for their own kids’ private school tuition. You will only get that credit by donating to a private school’s scholarship program.
As far as I can tell, nobody has yet come up with a way to pay for this $100 million program, which is problematic, if you ask me.
* Proft’s paper published a list of legislators who attended private schools. Note the number of Catholic schools on this list. The Catholic Conference of Illinois and the Chicago Archdiocese have been pushing hard for this new $100 million tax credit program and it hasn’t been covered at all by the media…
Rep. Dan Beiser - Alton Marquette Catholic
Sen. Bill Haine - Alton Marquette Catholic
Sen. Neil Anderson - Assumption Catholic (Davenport, IA)
Rep. Jerry Costello, II - Assumption H.S. (East St. Louis)
Rep. Dan Brady - Bloomington Central Catholic
Sen. Bill Brady - Bloomington Central Catholic
Sen. John F. Curran - Brother Rice
Rep. Kelly Cassidy - N/A (Elementary/Bradenton, FL)
Rep. Barbara Wheeler - Carmel Catholic (Mundelein)
Rep. Sam Yingling - Carmel Catholic (Mundelein)
Rep. Emil Jones, III - Chicago Christian (Palos Heights)
Rep. Thomas Morrison - Christian Liberty Academy (Arlington Heights)
Sen. Chris Nybo Fenwick - (Oak Park)
Rep. Jaime M. Andrade - Gordon Tech (Chicago)
Rep. Michael P. McAuliffe - Holy Cross (Chicago)
Rep. Sara Feigenholtz - Ida Crown Jewish Academy
Sen. Toi Hutchinson - Infant Jesus of Prague (Elementary/Flossmoor)
Rep. Larry Walsh, Jr. - Joliet Catholic Academy
Sen. Pat McGuire - Joliet Catholic Academy
Rep. Silviana Tabares - Lourdes (Chicago)
Rep. Robert Martwick - Loyola Academy (Wilmette)
Sen. Thomas Cullerton - Loyola Academy (Wilmette)
Sen. Jim Oberweis - Marmion Military Academy
Rep. Frances Ann Hurley - Mother McAuley (Chicago)
Sen. Bill Cunningham - Mt. Carmel (Chicago)
Sen. Heather Steans - Phillips Exeter Academy (NH)
Rep. Daniel J. Burke - Quigley South (Chicago)
Sen. Antonio Munoz - Quigley South (Chicago)
Sen. Martin Sandoval - Quigley South (Chicago)
Sen. Jacqueline Collins - St. Carthage (Elementary/Chicago)
Sen. Jennifer Bertino-Tarrant - St. Francis (Joliet)
Sen. John J. Cullerton - St. Francis (Wheaton)
Rep. Andre Thapedi - St. Ignatius (Chicago)
Rep. Elgie R. Sims, Jr. - St. Ignatius (Chicago)
Rep. Kelly M. Burke - St. Ignatius (Chicago)
Rep. Michael J. Madigan - St. Ignatius (Chicago)
Sen. Don Harmon - St. Ignatius (Chicago)
Rep. Christian Mitchell - St. Joseph’s (Westchester)
Sen. Mike Connelly - St. Joseph’s (Westchester)
Rep. Arthur Turner - St. Mel (Chicago)
Rep. John Mulroe - St. Patrick (Chicago)
Rep. Lindsay Parkhurst - St. Paul’s Lutheran School (Elementary/Kankakee)
Rep. Marty Moylan - St. Philip (Chicago)
Rep. Cynthia Soto - St. Procopius (Chicago)
Rep. Mike Zalewski - St. Rita (Chicago)
Rep. Sue Scherer - St. Teresa (Decatur)
Rep. Patty Bellock - Trinity (River Forest)
Rep. Barbara Flynn-Currie - University of Chicago Lab School
Rep. Justin Slaughter - University of Chicago Lab School
Sen. Kwame Raoul - University of Chicago Lab School
Rep. Sara Wojcicki Jimenez - Ursuline Academy (Springfield)
Rep. John C. D’Amico - Weber Catholic (Chicago)
Rep. La Shawn K. Ford - Weber Catholic (Chicago)
According to the paper, the current attorney general and four of the seven Illinois Supreme Court justices attended private schools.
* Back to the story, which seems designed to shame legislators into supporting the new bill…
For thee, but not for me
State Sen. Kwame Raoul (D-Chicago) and State Rep. Kelly Cassidy (D-Chicago) are two of Chicago’s most vociferous advocates for raising property and income taxes to spend more money on Chicago Public Schools (CPS).
Neither have said how much CPS would have to spend to convince them to send their own kids there, however.
Raoul has a daughter at University of Chicago Lab School, his own alma mater. His son graduated from Chicago Lab last year and attends Lake Forest College.
Cassidy’s three children attend Francis Parker, an elite private school in Lincoln Park.
Both Chicago elected officials argue their constituents should choose Chicago Public Schools, while simultaneously avoiding the schools themselves. And they’re in good company.
* Background is here. From the Illinois Republican Party…
“J.B. Pritzker’s new television ad is a deceptive attempt to cover up his family’s history of attacking the labor movement. Pritzker personally profits by exploiting union labor - just listen to what union protesters have to say about the billionaire family. Just like Mike Madigan, J.B. Pritzker is a politician with zero credibility who says one thing and does another.” – Illinois Republican Party Spokesman Steven Yaffe
In response to J.B. Pritzker’s new television ad lauding his insider endorsement of Madigan-backed labor groups, the Illinois Republican Party today released a digital video highlighting Pritzker’s true record on labor.
Pretty well done. The quote from the IFT’s leader is particularly impressive…
I want to thank the Pritzker family for uniting us all here today. It’s not enough for them to go after the workers in their hotels, they have to go after teachers.
*** UPDATE 1 *** From the IFT’s Dan Montgomery, who is featured in the above video…
“IFT members know that the Illinois Republican Party has become a wholly-owned subsidiary of Bruce Rauner, who has been leading the charge to rob workers and deny them a voice in the workplace. This six-year-old video clip is an attempt to distract attention from the Governor’s abysmal record and unpopular political demands that nearly drove Illinois off a fiscal cliff had members of his own party not stepped up to do the right thing. Rauner should focus less on campaigning and more on doing his job.”
*** UPDATE 2 *** From Chicago Federation of Labor President Jorge Ramirez…
“It’s clear that Bruce Rauner is leading the Illinois GOP and this attack on JB. For Rauner to pursue this line of attack after we’ve seen the way he treats public-sector workers across Illinois is hypocritical and laughable. He and his special-interest friends have tried to destroy our state’s labor movement and the public services that so many residents of Illinois rely on every day. Everything we care about is under assault by Bruce Rauner. There is no greater priority for us than defeating him in November and sending a leader like JB Pritzker to Springfield.”
*** UPDATE 3 *** Illinois AFL-CIO President Michael T. Carrigan…
“If it wasn’t so pathetic, it would be laughable that the Illinois Republicans levy an attack concerning union member and worker rights. Many Republican Party politicians in Illinois have followed blindly down Bruce Rauner’s path of destruction. His refusal to compromise on a budget hurt so many – all driven by his obsession to subvert wages, destroy unions and weaken protections for middle class Illinois families. If the Republican Party would like to take a stand with unions and working families of this state, they should start by standing up to their leader and chief benefactor.”
[ *** End Of Updates *** ]
* And the accompanying oppo dump…
During the recession, the Pritzker family faced mass protests from its workers over mistreatment and attempts to prevent unionization.
As Crain’s Chicago Business notes, “Hyatt fought efforts by Unite Here union to organize and secure raises for Hyatt workers.”
In one infamous incident, the Pritzkers turned heat lamps on picketing workers during a heat wave.
J.B. Pritzker personally profits from the family business, owning nearly 2% of Hyatt and acting as a key member of the majority voting block that controls the company. One of Pritzker’s cousins chairs the board of directors.
Pritzker even agreed to align his share’s vote with his cousins’, making him a critical part of their voting block and an enabler to all of their controversial decisions regarding employee mistreatment.
Pritzker even bragged about his role in Hyatt on his website – describing himself as a “principal owner”.
JB Pritzker Has Enabled And Supported Hyatt’s Management
JB Pritzker Currently Controls 1.9% Of The Total Voting Power For Hyatt Hotels Corporation. (Form SC 13D, Charles E. Dobrusin, SEC Accession No. 0001144204-17-001664, 1/10/2017)
When The Pritzkers Took Hyatt Public, The Family Controlled 80 Percent Of The Class B Shares, Which Have 10 Times The Voting Power Of Class A Shares. “Hyatt Hotels Corp. announced recently that the shares will be priced at $23 to $26. The offering is structured so the Pritzker family would own 80 percent of Hyatt’s Class B common stock, each share of which has 10 times the voting power of a Class A common share. The company’s initial public offering of 38 million Class A shares would raise between $874 million and $988 million.” (Julie Wernau, “Hyatt IPO Plan Draws Fire,” Chicago Tribune, 10/29/2009)
This “Super-Voting” Stock Allowed The Pritzkers To Maintain Control Over Hyatt Even If Their Ownership Of The Company’s Outstanding Shares Fell Below 50%. “Hyatt Hotels Corp. is likely to see “outsized profit growth” over the next decade, but the Pritzker family’s tightfisted control over the underachieving hotel chain should make investors wary of its initial public offering, a prominent real estate stock research firm said Wednesday. The proposed IPO could raise about $1 billion for Chicago-based Hyatt, the crown jewel of the billionaire family. Pritzker family trusts plan to sell 38 million shares for as much as $26 apiece, according to a filing last week with the Securities and Exchange Commission. But the family plans to retain its grip on the company through so-called “super-voting” stock, which would allow the Pritzkers to outvote other common shareholders even if the family’s stake falls to nearly 15%.” (Thomas Corfman, “Hyatt’s Corporate Structure Criticized In Report,” Crain’s Chicago Business, 10/29/2009)
JB Pritzker Agreed To Vote His Super Shares In Line With The Recommendations Of Hyatt’s Board Of Directors. “Until the later to occur of (i) January 1, 2015 and (ii) that date upon which more than 75% of the FD Stock is owned by Persons other than Pritzkers and Foreign Pritzkers, all Pritzkers (and their successors in interest, if applicable), but not the transferees by sale (other than Pritzkers or Foreign Pritzkers who purchase directly from other Pritzkers or Foreign Pritzkers) or by, or following, foreclosures as aforesaid, will vote all of their voting securities of Hyatt (and successor Companies) consistent with the recommendations of the board of directors of Hyatt with respect to all matters (assuming agreement as to any such matter by a majority of a minimum of three Independent directors or, in the case of transactions involving Hyatt and an Affiliate thereof, assuming agreement of all of such minimum of three Independent directors). All Pritzkers will cast and submit by proxy to Hyatt their votes in a manner consistent with this Section 3.1(c) at least five business days prior to the scheduled date of the Annual or Special Meeting of stockholders of Hyatt, as applicable.” (“Amended and Restated Global Hyatt Agreement,” Hyatt Hotels Corporation, 10/1/2009)
JB Pritzker’s Cousin, Thomas J. Pritzker, Is The Executive Chairman Of Hyatt’s Board Of Directors. (Board of Directors, Hyatt Hotels Corporation, Accessed 1/17/2017)
Jason Pritzker, Thomas Pritzker’s Son, Is Also On Hyatt’s Board Of Directors. (Board of Directors, Hyatt Hotels Corporation, Accessed 1/17/2017)
Penny Pritzker, JB Pritzker’s Sister, Served On Hyatt’s Board Of Directors Until She Was Appointed Commerce Secretary In 2013. “Chicago billionaire Penny Pritzker intends to resign from corporate boards, including that of Hyatt Hotels Corp., and reported that she received nearly $54 million in consulting fees last year from an offshore Bahamian trust, the Commerce Department secretary nominee said in documents released Wednesday.” (Melissa Harris and Katherine Skiba, “Pritzker Opens The Books On Finances,” Chicago Tribune, 5/16/2013)
* Before it quietly updated with a new story, the Illinois Policy Institute, like Gov. Rauner, was claiming a vote to accept Rauner’s SB1 amendatory veto only required a simple majority…
* Now, let’s look again at the brutal video of Gov. Rauner being informed that it’ll require a three-fifths majority to accept his amendatory veto and not the simple majority that Rauner claimed…
Watch how the governor physically leans into his answer. People often do that when they’re trying to emphasize a point.
Transcript…
REPORTER: What makes you think that three-fifths of the House and three-fifths of the Senate will agree on any particular thing here?
RAUNER: Well, upholding — Dave, it’s a great question — upholding my, uh, amendatory veto and passing it in concurrence requires a simple majority. Upholding my amendatory veto, supporting the changes I’ve recommended just, just…
REPORTER: Democrats say otherwise because of the immediate effect, because it needs to take effect immediately.
RAUNER: So, okay, so, upholding it can be a simple majority
“Great question,” he says, as if he’s actually been prepared for this very query. And then he says twice that it only requires a simple majority and tries to say it yet another time, but is cut off by a pesky reporter with an annoying fact.
* So, why is this important? Well, because it would’ve been a really good message: Hey, it just takes a simple majority to accept my changes while it will take a three-fifths super-majority to override my AV, so let’s just accept it and move on. Easy peasy.
Indeed, Rep. Avery Bourne, a close Rauner ally and one of just eight education funding reform negotiators, used that very same messaging on Facebook recently…
* And the Champaign News-Gazette, which has been a staunch Rauner supporter, published this editorial on July 27th…
Rauner wants the bill now so he can use his amendatory veto power to excise the Chicago-friendly provisions.
Then the General Assembly has three options
It can do nothing, effectively killing the bill. It can override the veto by a three-fifths majority of each chamber. Or it can agree with the recommendations made by the governor by a simple majority vote in each of the chambers.
Gov. Rauner is hoping his planned action will be sustained in the Legislature, most particularly the House, where Speaker Madigan lost his super-majority in the last election. Madigan will be looking for four Republicans he can buy off to be able to overturn Rauner’s amendatory veto, the tactic he used to pass his version of the state budget/tax hike plan over the governor’s veto.
It sure looks to me as if the Best Team in America™ had a plan in place, but it was based on an erroneous assumption.
* Back to the press conference transcript…
REPORTER: Wouldn’t that be something though that your staff would have found out before you did this? Are you concerned at all that there’s a big difference between a simple majority and three-fifths and this could all blow up?
So, it may not just be a foiled messaging plan, it could also be a foiled legislative strategy that could do real harm.
* Perhaps the governor should’ve taken a meeting with Senate President John Cullerton before issuing his veto. Cullerton wanted to explain what the veto would mean, but Rauner called that suggestion “outrageous”. And the Chicago Tribune editorial board slammed Cullerton’s request for talks as an unconscionable delay tactic…
Rauner’s changes include eliminating a $250 million block grant Chicago schools have received for years that critics said the city would not get if the money was distributed through existing school aid formulas.
Rauner’s changes would still give Chicago schools $215 million to help with its teacher pensions. Chicago is the only school district in the state not covered by the state-funded Teachers Retirement System.
However, Rauner’s change would make the Chicago pension payment part of state pension law rather than the state’s school code. The seemingly innocuous change will require a follow-up budget bill to implement, Manar said.
* This is so weird. The governor moved the $215 million for pension money into another state statute after spending weeks “messaging” against the Chicago teacher pension money, and after vetoing that same $215 million in December of 2016…
Republican Gov. Bruce Rauner’s veto of a bill that would have eased Chicago Public Schools’ massive pension burden threatened to blow a $215 million hole into a budget that has been criticized by bankers and civic groups for its reliance on uncertain state assistance.
In reality, the CPS block grant has no formal relationship to pensions. All districts receive state reimbursement for seven “categoricals” above what they receive in General State Aid. Every district except Chicago has to submit vouchers to get reimbursed for these categoricals. But since 1995, Chicago has been reimbursed via a block grant, based, at least in part, on the reality that submitting claims for thousands of different students was burdensome. Over the years, as CPS enrollment has declined, the block grant resulted in the district receiving $250 million more than it would if it had to submit vouchers for reimbursement.
Rauner’s education czar Beth Purvis has said those extra funds have been audited, and aren’t being misspent. “There’s no implication that CPS is misusing those funds in any way, shape or form,” she told me in May. “We believe that they’re using them for the educational costs of educating those children.”
* So, the governor cut classroom money for CPS and kept the pension money in place (albeit in another statute) - the exact opposite of what he said he actually did…
“What the amendatory veto prevents is a diversion, an unfair diversion, removal of money, from the classroom to fund a broken pension system that deserves to be reformed and that deserves to be treated the same way all teachers pensions are treated,” Rauner said.
The governor also made some technical changes to the bill, including creating a per-pupil “hold harmless” provision in 2021 and beyond – rather than a district-level “hold harmless” provision, which was included in the original bill
Rauner would keep that so-called “hold harmless” provision in place until the 2020-21 school year, then switch the way funding is calculated from a per-district basis to a per-pupil basis. The upshot is that CPS and some Downstate districts that have seen declining enrollments stand to lose money.
For example, changing a provision in 2020 from holding each district harmless overall to holding it harmless on a per-pupil rate would affect the hundreds of Illinois districts losing students, and that’s problematic, Ostro said, because the state’s funding already is too low.
“Under the SB 1 model no district loses money year over year — it’s about how new dollars are distributed,” she said. “That’s important when districts are already inadequately funded.”
But how many is it?
* The House Democrats have a spreadsheet which claims 222 school districts lost enrollment between F& 2015 and FY 2016, or just shy of a quarter of all districts. Click here for the list. Some of those lost just a few pupils, but if that continues and the governor has his way, those districts are still going to be hurt.
Of those 222 districts which lost population, 156 were in House Republican districts, mostly Downstate. Click here for that info. Rep. Avery Bourne, a Republican school funding negotiator, has six school districts which lost population, according to the HDem spreadsheet.
Needless to say, the districts which are gaining lots of students are generally in areas that are economically thriving. So a per pupil-based hold harmless would benefit those well-off districts at the expense of those which are struggling.
* What’s needed is a compromise. Allow many of the growing districts to receive more money to help with their expanding needs, but allow districts with declining student populations to hold onto their money.
Just because a district loses students doesn’t mean its fixed costs decrease by the same percentage, after all.
Today, the JB Pritzker for Governor campaign released a new TV ad, “Enough.” The ad features working Illinoisans who are passionate about electing JB Pritzker and defeating Bruce Rauner next fall.
“Enough” highlights union members discussing Bruce Rauner’s attacks on working families and JB’s commitment to fighting for them in Springfield. The ad comes as labor support for JB continues to grow across the state, with recent endorsements coming from Illinois Painters District Councils, United Steelworkers, and the Illinois AFL-CIO. In total, JB has been endorsed by 17 individual unions so far.
“Working families across this state are ready for a real leader who fights for them in Springfield and that’s exactly what I’ll do as governor,” said JB Pritzker. “Together, we will defeat Bruce Rauner and end his attacks on the labor movement and working families. When I’m governor, the labor movement will once again have a seat at the table as we grow the economy, create jobs, and protect the rights that help workers thrive. I am grateful to have support from the labor movement across the state and I will always stand with working families as governor.”
JB will stand up for working families. And he’s focused on creating jobs.
JB’s the one we trust to beat Bruce Rauner.
To beat Bruce Rauner.
To get Illinois — to get Illinois back on track.
…Adding… Some of y’all in comments are a bit unclear on the concept. This is a TV ad for a Democratic primary. And unions are more popular overall than some of you realize. From a, October, 2016 Paul Simon Public Policy Institute poll…
Among the 1,000 Illinois registered voters surveyed, more than half (57 percent) say they have at least a somewhat favorable view of labor unions, more than 20 points ahead of the 36 percent who have an unfavorable view. […]
Self-described liberals (75 percent), Democrats (73 percent), and members of union households (75 percent) were most likely to have favorable views of unions. Only among conservatives and Republicans (37 percent each group) did fewer than half hold a favorable view.
Historically marginalized groups tend to desire that unions have more influence than they do today. Notably, 49 percent of African Americans want unions to have more influence compared to only 26 percent of whites.
Similarly, 40 percent of people with household incomes below $50,000 would like to see unions have more influence compared to only 24 percent of those with incomes over $100,000.
