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Close on 6-month stopgap, not there yet on K-12

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* As subscribers know, the Rauner administration has agreed to do these three things…

Rauner on Thursday said Democrats have made “tweaks” to the temporary budget bill proposed by Republicans, asking for more money for MAP grants and human services. Rauner’s administration also indicated Democrats are asking for more higher education funding, in addition to funding for MAP grants.

Subscribers also know how they’re going to pay for them.

* But, as I told you yesterday…

Rauner said it’s “not fair” for suburban and Downstate taxpayers to foot the bill for CPS’ financial problems. Asked if he would sign a stopgap funding bill that included a CPS bailout, Rauner replied, “absolutely no.”

“What we’ve been told from the other side is that they’re willing to work out with us the stopgap budget, that we’re close,” Rauner said Thursday after speaking at a business banquet in downtown Chicago. “But what they’ve also made crystal clear is that Chicago’s public schools need a bailout, want a bailout, and they’re going to hold up everything in these budgets, in these negotiations, for Chicago Public Schools to get a bailout. That’s not fair.”

* Counter…

[Speaker Madigan’s press secretary Steve Brown] dismissed Rauner’s assertion, saying that “no one’s talking about bailouts” to CPS.

* Rauner was asked yesterday at the Crain’s editorial board meeting if he would support any extra money for CPS beyond what he’s already proposed, which is level funding with this fiscal year…

“No (more money),” Rauner said. “That’s just rewarding bad behavior at the expense of the suburbs and downstate.”

The fact is, CPS bureaucracy is “bloated and inefficient” and the agency has “squandered” its resources, Rauner said. And with the city property-tax base rising and the number of CPS students dropping, they normally should get less state aid, not more

“They created their own crisis,” Rauner concluded, sharply disputing CPS officials who say a system that mostly serves poor minority students long has been short changed. And with city property taxes lower than in many suburbs, Emanuel has that option if he doesn’t like bankruptcy, the governor said.

A Rauner aide later suggested that more money for all schools, not just CPS might be found if new revenues are obtained, but Democrats don’t want to talk about a tax hike until after the elections.

* Instead of more money, he wants CPS to declare bankruptcy…

“They could have CPS reorganize their debts and their contracts under a bankruptcy in front of a judge, reorganize their obligations,” Rauner said. “That’s not a terrible thing, it wouldn’t have to result in any layoffs.” […]

“Governor Rauner is itching to subject Chicago students to his old slash-and-burn corporate takeover tactics, decimating our schools and cheating teachers of their pensions – when he should be providing adequate and equitable funding,” said CPS spokesperson Emily Bittner. “We’ll keep fighting to make sure that Governor Rauner can’t avoid his responsibility to fund schools around the state and protect our children’s futures.”

Mayor Emanuel also criticized the governor’s suggestion, and for recently comparing Chicago Public Schools to prisons.

“Do we give that child at a better tomorrow, or run them down and say that they’re in prisons?” Emanuel asked Thursday. “I am tired of this. This child is not a prisoner in a prison.

* And…

As to how exactly the process would work: the district would go before a bankruptcy judge with all of its creditors – such as people who hold debt, and pensioners, etc. – and all parties would have to work out a path forward, establishing essentially who gets paid what. It isn’t the judge that would unilaterally determine that.

The negotiations could get contentious, especially with retirees and how ironclad the state constitution is on the protection of pensions. The Better Government Assoication told “Chicago Tonight” that CPS could actually come out in worse shape than it entered. That’s because the purpose of bankruptcy is to make sure creditors are paid as much as they can get out of it – the whole purpose of educating children could get lost in the mix. It also means CPS may never have future access to capital markets.

Another expert told us that only two school districts, and very tiny ones at that, have gone through Chapter 9 bankruptcy in the last 60 years, and he says it was not a successful endeavor.

The General Assembly would have to pass a law to allow CPS to go bankrupt, something that is highly unlikely to happen.

posted by Rich Miller
Friday, Jun 24, 16 @ 8:35 am

Comments

This is the first time Ive read where CPS could come out of bankruptcy in worse shape financially. The fact there is no possible way to alter or adjust anything to do with pensions should be all the more reason to move away from them. If the retired teachers had defined contribution systems right now they wouldn’t have to worry about any of this and CPS wouldn’t be trapped going insolvent.

Comment by Maximus Friday, Jun 24, 16 @ 8:51 am
The irony of course is that Governor Rauner is eager to pump money into downstate prisons, and if these kids actually were in prison, the taxpayers would be spending about $88K a year on them, according to a report from The Steans Family Foundation.

Comment by Juvenal Friday, Jun 24, 16 @ 8:55 am
re: Pension

Rauner in his Crain’s interview was certain that the state constitution would be trumped by the Federal courts. In fact, he was 100% certain.

“Federal law trumps state,” he said confidently.

So as far as Rauner is concerned, there is no constitutional issue with pensions in bankruptcy.

Comment by Formerly Known as Frenchie M Friday, Jun 24, 16 @ 8:55 am
On the bankruptcy stuff, you buried the lede: “The General Assembly would have to pass a law to allow CPS to go bankrupt, something that is highly unlikely to happen.”

As bad an option as it would be, even bankruptcy isn’t currently an option for CPS. If CPS gets to a point where it can’t pay its bills, the result will be a chaotic default.

Comment by Jason Horwitz Friday, Jun 24, 16 @ 8:56 am
–The Better Government Assoication told “Chicago Tonight” that CPS could actually come out in worse shape than it entered. That’s because the purpose of bankruptcy is to make sure creditors are paid as much as they can get out of it – the whole purpose of educating children could get lost in the mix. It also means CPS may never have future access to capital markets.–

Bankrupt Bruce needs to consult his former string of bustout lawyers. Perhaps they could explain to him that munis just can’t go bankrupt and walk away; they have ongoing missions and sovereign revenue-raising powers.

It’s not like Rauner could sneakily transfer control of CPS to some befuddled old man in a wheelchair, like he did with his nursing homes, to avoid liability and responsibility.

His abuse of the bankruptcy courts in the private sector won’t yield the same results in the public sector. The muni bankruptcy record is clear on that.

But his knee-jerk fallback to bankruptcy certainly is part of Rauner’s consistent strategy of avoiding responsibility and accountability at all costs.

Heckuva an attitude for a governor to have.

Heckuva

Comment by wordslinger Friday, Jun 24, 16 @ 8:59 am
That’s because you spend your time in a right wing echo chamber Maximus. You constantly come on here spouting facile dorm room dogma rather than evidence-based approaches that account for political realities.

Comment by YSW Friday, Jun 24, 16 @ 9:00 am
Raunerism isn’t about outcomes, it’s about ideology.

Comment by Anon Friday, Jun 24, 16 @ 9:04 am
What seems to get lost in all this is Rauner doesn’t want a full year budget. He wants what he wants.

Comment by tobor Friday, Jun 24, 16 @ 9:08 am
In Rauner’s Crains interview he kept referring to the CPS ‘bailout’ as blackmail by the democrats to passing a stopgap budget and that “it is just plain wrong”. How is the turnaround agenda not exactly the same thing?

Remove the governors blackmail and we don’t need a stopgap…we can pass an actual budget!!

Comment by Consideration Friday, Jun 24, 16 @ 9:09 am
=That’s not fair.”=

Spoken like a true victim.

Oy.

Please spare us the victim speech, you are the Governor of Illinois and made an absolute boat load of money in our “collectivist” economy.

Comment by JS Mill Friday, Jun 24, 16 @ 9:09 am
-tobor-

He wants the partial solution because he needs the crisis still, but can’t take the heat of schools not opening. Parents of schoolchildren vote. The homeless, addicts and hungry don’t.

You know how I know that? There’s a bill to fund pay social services languishing on his desk with zero NO votes on it. It’s sitting there, but he’s busy demanding other things.

Starve the beast, huh?

Comment by illini97 Friday, Jun 24, 16 @ 9:11 am
In lieu of a “bail-out”, maybe Chicago should think about putting a surcharge on the price of the water it sells to other municipalities.

Comment by northsider (the original) Friday, Jun 24, 16 @ 9:12 am
Will Democrats fully endorse and embrace the hostage model of negotiations when it comes to CPS? Or will they disavow and practice what they preach?

Comment by Hostages 'R Us Friday, Jun 24, 16 @ 9:14 am
===On the bankruptcy stuff, you buried the lede===

If you don’t already know something as basic as that, then perhaps you need to stick with newspaper and TV websites.

Comment by Rich Miller Friday, Jun 24, 16 @ 9:14 am
With school funding formulas possibly getting revamped, is it time now for the State to start picking up the employer’s share of teacher’s pensions in CPS, like the State does for every other school district in Illinois? Or just the opposite, is it time now for the State to shift all teacher’s pensions to the school districts? These have been ongoing questions, but with no easy answers.

Comment by Joe M Friday, Jun 24, 16 @ 9:22 am
YSW,
Why the hate? Which part of my statement upsets you? The system is broken and we come here to discuss how to fix it. I don’t see you adding much to the conversation.

Comment by Maximus Friday, Jun 24, 16 @ 9:24 am
-=== northsider (the original) - Friday, Jun 24, 16 @ 9:12 am:

In lieu of a “bail-out”, maybe Chicago should think about putting a surcharge on the price of the water it sells to other municipalities.===

It already did this two years ago. My water bill doubled.

Comment by Ratso Rizzo Friday, Jun 24, 16 @ 9:32 am
Look Rauner has turned the ship of Illinois broadside on to the recession wave that is about to sweep the world caused by Brexit. Folks we are taking on water and listing. If a recession hits us right now, our state economy is literally done for. Think about it. Our best companies in the state are going to be reeling from the market crashes. That is going to have profound effects.

Comment by Honeybear Friday, Jun 24, 16 @ 9:33 am
Some men just want to watch the world burn.

Comment by SAP Friday, Jun 24, 16 @ 9:36 am
=This is the first time Ive read where CPS could come out of bankruptcy in worse shape financially.=

Of course it is. Because when we hear the word “bankruptcy” we ascribe a certain meaning to it much like the word “reform”. The problem is that we don’t ask the question, “what are the benefits” (and who receives them). I’m sure that there are winners in CPS bankruptcy, but that doesn’t necessarily mean that it’s the students or teachers. In the same way that someone is going to reap the benefits of the 1.4% associated with the turnaround agenda. But it’s not going to be social services or higher education.

Comment by pundent Friday, Jun 24, 16 @ 9:41 am
Maximus, you’re no victim. If you’re unaware of the devastating consequences of CPS bankruptcy for Chicago schoolchildren, maybe you should leave the discussion to people who know what they’re talking about.

Comment by YSW Friday, Jun 24, 16 @ 9:43 am
If Rauner wants to stall everything because he wants no “bailout” for CPA, it might convince the Sen Dems to reconsider Madigan’s budget. They certainly can put up the 36 needed for passage if pushed into a corner.

Comment by Norseman Friday, Jun 24, 16 @ 9:44 am
technical note to our host.

This page/headline is not showing on the daily index of headlines on the upper right.

Comment by cdog Friday, Jun 24, 16 @ 9:46 am
Is the lack pension parity a valid point?

It seems, on its face, to be a realistic request for CPS to have pension parity.

Of course, if pension parity was corrected, it would give CPS a little something to work with as they reorganize themselves.

Comment by cdog Friday, Jun 24, 16 @ 9:49 am
cdog, I checked it on three browsers and it’s working for me.

Comment by Rich Miller Friday, Jun 24, 16 @ 9:49 am
Why everyone lets Rauner get away with constantly calling it a “bailout” is beyond me. Leaving reworking of the education formula aside, there is no reason why CPS shouldn’t get pension parity today. If there is any bailout going on today, it is the Chicago taxpayers bailing out the rest of the state by paying for pensions twice.

Comment by CPS Parent Friday, Jun 24, 16 @ 9:53 am
Maximus, I don’t think they meant worse fiscal shape, I think they meant worse shape as an operation.

Why pay for fewer kids in a class, foreign language, longer school day, longer school year, after school programs, extracurricular activities, when the district has to pay these debts.

That’s what a bankruptcy judge would be looking at, and it would likely mean an even worse education for kids in CPS.

Comment by Juice Friday, Jun 24, 16 @ 9:55 am
YSW,
I understand bankruptcy just fine. The trick will be making sure the people of Chicago understand what it means for their children and making sure the cause of the bankruptcy is addressed and fixed going forward.

Comment by Maximus Friday, Jun 24, 16 @ 9:57 am
It has now shown up on mine.

Running latest Firefox, Windows Vista, with AVG.

Probably me. Windows 10 on my todo list…

Comment by cdog Friday, Jun 24, 16 @ 9:59 am
Is bankruptcy Rauner’s solution to everything? As long as I solve my problem I do not have to care about anyone else. Guess it does not matter if the companies who have supplied services and products to CPS get stiffed. Tough luck for them. Same thinking process as just not paying your bills.

Comment by zatoichi Friday, Jun 24, 16 @ 9:59 am
Bankruptcy to decimate unions, and… to put front and center the dismantling of CPS for money, not for education.

Rauner doesn’t care…

Rauner does care about Rauner wants and not about the people or institutions destroyed.

Both are true.

Comment by Oswego Willy Friday, Jun 24, 16 @ 10:03 am
–If a recession hits us right now, our state economy is literally done for. Think about it.–

I thought about.

I don’t think so. The world really doesn’t work like that.

There’s a natural conceit to think the problems of the moment are the biggest problems of all time. That’s really not the case here.

But I’d coat the stomach first if you’re going to participate in any “Brexit recession” drinking games over the next few days.

Comment by wordslinger Friday, Jun 24, 16 @ 10:10 am
I don’t live in Chicago, I live in rural Illinois. But we all have an interest in seeing the children in Chicago and in all our school districts succeed. They are our future. When children of any school district fail, it affects all of us in the state negatively. Just take a look at how full our prisons are. I’d much rather be paying for schools than prisons. I’m okay with pension parity for Chicago. I’m okay with an emphasis of heavily weighing state school funding formulas for districts with high poverty rates. This divisiveness of part of the state against the other is not good for our state.

Comment by Joe M Friday, Jun 24, 16 @ 10:30 am
Honeybear - I would add that 1.4% has pointed the cannon at the deck and is pulling on the lanyard. Meanwhile, marines are posted along the rails with muskets loaded and bayonets fixed to prevent the passengers and crew from jumping ship.

Comment by Huh? Friday, Jun 24, 16 @ 10:37 am
cdog,

I’v noticed in the past that there is a short lag between when a topic is posted and when it shows up on the upper right. The lag only lasts for a short time, but if the browser doesn’t update the page, it can appear to last much longer.

Comment by Pelonski Friday, Jun 24, 16 @ 10:45 am
I wish our Governor would stop publicly falling back to “solutions” which cannot be achieved, especially when we are this close to some bi-partisan compromises.

Comment by walker Friday, Jun 24, 16 @ 10:51 am
Whaddya know, Maximus drops the doe-eyed act and makes it clear that he’s down to inflict pain on schoolchildren in order to whack unions.

Comment by YSW Friday, Jun 24, 16 @ 11:00 am
YSW,
So we shouldn’t fix the cause of the bankruptcy/insolvency and you are in favor of pretending there is no problem? Way to be part of the solution.

Comment by Maximus Friday, Jun 24, 16 @ 11:12 am
Rich I noted that the Gov has agreed to some Phleager money that had been turned off. Hmmm timing seems that the good father raised a ruckus over the Gov speaking at some event and had a hand in shutting it down and now some money is loosened up.

hmmmm coincidense?

Comment by Todd Friday, Jun 24, 16 @ 11:13 am
=So we shouldn’t fix the cause of the bankruptcy/insolvency=

Just asking, what do you think the “cause” is and how exactly does bankruptcy “fix” it. If you can’t articulate the answers to these simple questions then you’re probably making YSW’s argument for him.

Comment by pundent Friday, Jun 24, 16 @ 11:17 am
This is what one gets w/ a “businessman” governor–they preach what they know. and all this guy knows is solving problems by bankruptcy so he can take the money and run.

Comment by d.p.gumby Friday, Jun 24, 16 @ 11:17 am
Maximus, every serious, reality-based person understands that current pension obligations must be paid. Complaining about how we got here doesn’t help, nor does proposing a “solution” that clearly will never happen. The GA is not going to authorize bankruptcy for CPS, in part because of the senseless suffering it would inflict on schoolchildren and working families. So, it’s incredibly mean-spirited, not to mention lazy, to continue to tour bankruptcy as some kind of panacea. Pensions can be curtailed going forward, not backward.

Comment by YSW Friday, Jun 24, 16 @ 11:26 am
===
Close on 6-month stopgap, not there yet on K-12===

They better get there. The natives are well past restless.

Comment by A guy Friday, Jun 24, 16 @ 11:26 am
Tout, not tour. Apologies all.

Comment by YSW Friday, Jun 24, 16 @ 11:27 am
I’m looking forward to next Wednesday’s flip-flop, with the HGOP holding the bag.

Speaking of fair, does he plan on signing that appropriations bill…or are those social services agencies ‘bloated and inefficient’?

Comment by Jocko Friday, Jun 24, 16 @ 11:27 am
Joe M +1- as far as the success of all kids goes. I am in total agreement, well said.

For me the pension parody is a losing argument for CPS. They hold that out as an issue, but in reality CPS is not being shortchanged by the state anymore than anyone else is during “proration”.

CPS, when all funding is considered, gets its’ fair share and then a little more. The reality is that the majority of school districts are underfunded by the state.

I want to see CPS succceed as well as every other district. So if CPS is to get more funding it should not come at a cost to another district or districts.

Your point that everyone should pick up the employer’s cost is a stronger argument in my opinion. “Cost shift” as it is known is the one way that the pensions will be funded every year.

That is the answer to about $800 million in annual costs for the State (for TRS).

And, districts should be allowed to levy for TRS just like they do for Social Security and IMRF.

The state will have to pick up the debt costs for their borrowing and diverting from the pension system. That is about $6 billion annually, but it is a legitimate debt owed to the pension systems.

Comment by JS Mill Friday, Jun 24, 16 @ 11:29 am
QOTD nomination: What should we call the referendum for downstate to withdraw from the Illinois Union? Chi-exit? Saluki-exit? Below-I80 exit?

Comment by vibes Friday, Jun 24, 16 @ 11:40 am
=inflict pain on schoolchildren=

Because the lead, asbestos, closed school libraries and 70+ year average building age is not =painful= for schoolchildren?

smh. Neither bankruptcy or simply pouring more $ into CPS’ current mismanagement is ideal.

Comment by Formerly Known As... Friday, Jun 24, 16 @ 12:01 pm
vibes “Ill-Will” or “Ill-Won’t”

Comment by walker Friday, Jun 24, 16 @ 12:05 pm
“I’m sure that there are winners in CPS bankruptcy, but that doesn’t necessarily mean that it’s the students or teachers.”

Good point!

What will happen to the Chicago school kids and the teachers if Rauner forces Chicago Public Schools into bankruptcy?

Comment by Mama Friday, Jun 24, 16 @ 12:26 pm
Rich, is P-12 part of the 6 month stop-gap or does P-12 get a full budget appropriated while everyone else only gets a 6 months budget appropriated?

Comment by Mama Friday, Jun 24, 16 @ 12:28 pm
An argument against cost-shifting the employer’s responsibility of pensions from the state back to the school districts (as is already the case in CPS) is that the Illinois Constitution clearly says that the State shall be the primary funder of K-12 public education. If the State shifts pensions back to the districts, then that is the State further shedding its responsibility to be the primary funder.

Comment by Joe M Friday, Jun 24, 16 @ 12:42 pm
Formerly Known As - no one here is arguing that more money alone will solve all of CPS’s problems. Nice straw man there, plus your false dichotomy between that and bankruptcy. Sheesh.

Comment by YSW Friday, Jun 24, 16 @ 12:45 pm
YSW,
So if you have a bill due that is for $2000.00 and you only have $50.00 in the bank, what do you do? You can’t pay the bill. Prior to getting to that point you could try and re-negotiate with your creditors to figure out a financial solution that makes sense. This is not ideal but without any other solution the math says you wont be able to pay the bills. CPS is in a very bad scenario which is why people think bankruptcy is an option. You say it isnt, fine. Tell the people of Chicago how much the taxes need to go up to continue supporting a broken system. They might not be ok with that.

Comment by Maximus Friday, Jun 24, 16 @ 12:51 pm
Well Maximus bankruptcy isn’t an option for CPS because it’s not legally possible in Illinois and it won’t be. You might as well propose paying the pension debt with flying purple elephants.

Comment by YSW Friday, Jun 24, 16 @ 1:10 pm
Bankruptcy isn’t an option legally, we hear you. Without it CPS just goes insolvent and bills wont be paid and pension debt wont be paid and salaries wont be paid. Puerto Rico is an example of what will happen when bankruptcy isn’t an option and there isn’t any money.

Comment by Maximus Friday, Jun 24, 16 @ 1:25 pm
Maximus - SO what does bankruptcy “fix”.

Comment by Pundent Friday, Jun 24, 16 @ 1:36 pm
Bankruptcy would allow CPS to continue functioning while it re-structures debt. Otherwise it just shuts down.

Comment by Maximus Friday, Jun 24, 16 @ 2:01 pm
Maximus - Have you ever stopped to consider that there’s a reason why the law doesn’t allow for this? I’m sure you must have an answer because you have a keen ability to identify all of the “common sense” solutions and present clear analogies on how a persons household debt is equivalent to a complex publicly funded institution.

Comment by pundent Friday, Jun 24, 16 @ 2:21 pm
- tobor - Friday, Jun 24, 16 @ 9:08 am: -

He does want a full year budget for P-12 education. However, everyone else can die on the vine as far as he is concerned.

Comment by Mama Friday, Jun 24, 16 @ 2:56 pm
In sum, at this point,just to hear that they’re “close” is terIFFic News…!

Comment by Anonymous Friday, Jun 24, 16 @ 3:44 pm