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CPS board approves budget with $215 million hole, Republicans edgy about vote

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Illinois

The Chicago Board of Education approved an amended $5.5 billion operating budget for Chicago Public Schools on Wednesday but acknowledged more drastic changes could come next month after the governor blasted a $215 million hole in its budget. […]

School board president Frank Clark said he remained “optimistic” but acknowledged for the first time that the cash-strapped CPS may have to make other plans.

“There’s approximately another month in the 99th General Assembly, and until that ends, I expect the state will fulfill its promise and keep its word, and provide the necessary funding for Chicago children,” Clark said. “If for whatever reason the unthinkable occurs, we are prepared to deal with another amended budget at our next regular board meeting in late January.”

The district wouldn’t discuss any possible cuts, saying they expect legislators to come through. CEO Forrest Claypool also renewed the possibility of filing a lawsuit he had prepared in June while waiting to see if legislators would approve hundreds of millions in state aid, including the pension money. The district isn’t in any kind of financial shape to be able to borrow the money.

* The Republican Party of Illinois is still trying to shake loose some answers from House Democrats. My in-box today…

* Sample e-mail…

“Yesterday, Chicago Public Schools passed a budget with a $215 million hole, signaling that they are still counting on the House to override Governor Rauner’s veto of the Chicago bailout. Robyn Gabel has refused to rule out voting for the bailout. Gabel owes it to the families in her district to guarantee that if an override is called, she will stand with them and vote no.” – Illinois Republican Party Spokesman Steven Yaffe

Yesterday, the Chicago Public Schools board passed a budget with a $215 million hole.

After Democratic leaders reneged on their promise to pass pension reform, an agreement that would have freed up resources for Chicago schools, House Democrats will soon face their first big test.

They can either stand for taxpayers who are demanding fiscal sanity from Springfield, or vote to recklessly bail out Chicago Public Schools.

I don’t think it’s unreasonable to ask the question, whether or not you agree with the way it’s being asked.

posted by Rich Miller
Thursday, Dec 8, 16 @ 2:26 pm

Comments

Kinda like passing a state budget assuming the tax increase would be continued. Edgy indeed.

Comment by walker Thursday, Dec 8, 16 @ 2:28 pm
@Walker

Or introducing one that assumes savings from a pension bill that hasn’t passed yet.

To the post: Not unreasonable to ask the question, but didn’t the governor say publicly that the bill wasn’t a bailout after all?

Comment by Curious Thursday, Dec 8, 16 @ 2:34 pm
Ummm, what about all the Republicans that voted for the bill? Shouldn’t the Illinois Republican Party be asking the Republicans that voted for the bill the same thing? I mean there are a lot of Republicans that voted for the bill to bailout Chicago.

Comment by From the 'Dale to HP Thursday, Dec 8, 16 @ 2:35 pm
Sample answer:

“I want all of our school districts to get the funding they need, especially right here in (my district). The state needs a balanced budget first and foremost. The historic pension under funding began long before I came to Springfield, but that doesn’t mean it isn’t my problem. I am open to hearing exactly what the Governor has in mind. Given the recent court rulings, however, I don’t think we can simply cut benefits. We have to find a creative solution to the growing debt. I wish the Governor would present a budget to start this discussion, because frankly, there is no better person to lead on this and other challenging issues than our Governor. I stand ready to work with him and call on him, again, to present a balanced budget that meets Illinois’ priorities.”

Comment by 47th Ward Thursday, Dec 8, 16 @ 2:39 pm
Perfect response 47th Ward

Comment by ILGOV2018 Thursday, Dec 8, 16 @ 2:43 pm
I don’t see Republicans lining up to give CPS home rule authority which would remove the need to have silly votes like this.

Comment by Will Caskey Thursday, Dec 8, 16 @ 2:48 pm
=”They can either stand for taxpayers who are demanding fiscal sanity from Springfield, or vote to recklessly bail out Chicago Public Schools.”=

Funding Chicago Public Schools is part of the State of IL’s responsibility. With exception of size, CPS is no different than funding another other school district in IL.

In my opinion, Rauner does not want to help Chicago because he hates the teachers’ union. In addition to that there is a strong indication he plans to privatize Chicago Public Schools.

The people living in Chicago are taxpayers too which makes the question invalid.

Comment by MAMA Thursday, Dec 8, 16 @ 2:56 pm
Walker - the only thing I could think of after reading your post is Austin Powers asking the dealer to hit him in Black Jack after having a 17. “I took like to live dangerously.”

Comment by Team Sleep Thursday, Dec 8, 16 @ 2:57 pm
=- 47th Ward - Thursday, Dec 8, 16 @ 2:39 pm: =

47th - You hit a homerun! Good one.

Comment by Mama Thursday, Dec 8, 16 @ 2:59 pm
Well played - 47th Ward -

Well said.

It’s not impossible to respond, it’s impossible to believe that they won’t respond.

That’s the problem now.

Comment by Oswego Willy Thursday, Dec 8, 16 @ 3:01 pm
Two Nuclear power plants that lose money, whose parent company had an excess of $2 billion dollars in profits last year alone, were given a yearly bailout of $235 million per year.
Then the Illinois Commerce Commission gave approval for a $2/month rate increase to the same company which adds another $173 million per year.
This is being paid for by every household in the State of Illinois.
So people of Chicago, the Governor won’t help you but he’ll use your money to bailout Clinton and the Quad Cities.
Make you feel better?

Comment by DuPage Bard Thursday, Dec 8, 16 @ 3:06 pm
Proposed tax on “bailout” emails projected to raise $7.8 billion annually from IL GOP alone. Revenues could balanced budget and wipe out bill backlog within 18 months.

Comment by Michelle Flaherty Thursday, Dec 8, 16 @ 3:09 pm
As I have posted before the $215.3 million was to have been a one time payment made directly to the Chicago Teachers Pension Fund and does not solve the CPS problem. Public Act 99-0521 allowed CPS to levy a property tax dedicated to the Chicago Teachers’ Pension Fund at a tax rate of 0.383%. This levy is expected to generate only about $250 million per year. But CPS is required to make a contribution of $720.2 million to the Chicago Teachers’ Pension Fund in FY2017, growing to $815.7 million in FY2021 according to an analysis done by the Civic Federation.

So its obvious CPS would need on going support from the State of Illinois to make these payments and all its accumulated debt, new teachers contract, etc.. I don’t see the political support for overriding this veto, and I am guessing there is even less support for any on-going obligation on the part of the State.

My guess is CPS is considering the possibility of simply paying the CTPF $215.3 million less than the actuarial analysis requires. CTPF would then have to file in State Court against CPS and get court ordered payment. If CPS then makes draconian cuts or backs out of the CTU contract completely it can deflect responsibility on to the courts and seek yet another exception to the PETLL cap using a court order as its reasoning.

No matter how CPS plays this its a mess, and the proposed CPS $1 billion capital plan based on long term debt is simply madness right now.

Comment by Rod Thursday, Dec 8, 16 @ 3:13 pm
Emphasis on …” Democratic leaders reneged on their promise to pass pension reform”

Comment by Lech W Thursday, Dec 8, 16 @ 3:19 pm
Any other school district with these deficits would have been taken over by the state years ago. But CPS not only escapes state takeover but also continues with irrational and out of balance budgets. As a non-Chicagoan and a school board member who helped his district eliminate a deficit through cuts and reality based budgets I have no tolerance for a bail-out for CPS. They have too many schools and too many teachers, they have to adjust to real student numbers not CTU demands. CPS has been failing and continues to fail its children and taxpayers. It should be broken up and taken away from the control of the mayor. Anything less is capitulation to the status quo and the status quo condemns too many children to substandard education. But if the people of Chicago won’t fight for change then the state shouldn’t even think of bailing them out.

Comment by NeverPoliticallyCorrect Thursday, Dec 8, 16 @ 3:23 pm
- Lech W -

Can’t explain away a Veto.

Rauner chose to hurt Chicago students with the tool only a governor can wield.

Judge Smails “Didn’t want to do it” never works.

Governors own their Vetos.

Same as it ever was, before and even after Rauner.

Comment by Oswego Willy Thursday, Dec 8, 16 @ 3:24 pm
If the Dems who run this State want to do something for CPS- pass a municipal bankruptcy provision and let a federal judge best address the Districts finances. It won’t happen anytime soon but it would permit the District to address the pension issues with finality

Comment by Sue Thursday, Dec 8, 16 @ 3:27 pm
=Rauner chose to hurt Chicago students with the tool only a governor can wield.=
How does this hurt the students? Governor Rauner didn’t mismanage the CPS budget for decades.

Comment by Frankly Thursday, Dec 8, 16 @ 3:37 pm
Never Politically Correct (NPC) I assume you are aware that the finances of CPS were taken over in 1979 by a state mandated oversight body called the Chicago School Finance Authority. That entity bonded and paid off the CPS debt. CPS was then set free and turned over to the control of Mayor Richard M Daley who proceeded to again with the help of his appointed Board of Education to fiscally wreck the district by big capital expenditures and multiple year CTU contracts.

As I indicated above I don’t see the General Assembly supporting an on going bailout, because the $215.3 million is just the start. I do see the Assembly lifting the PTELL for Chicago if it stiffs the CTPF, gets sued and is forced to pay up.

Its really a game being played out right now on shifting responsibility for property tax increases inside of Chicago to keep CPS in business. Emanuel can blame Rauner for the $215.3 million and at like that would make CPS whole when he knows full well it won’t. Then CPS can try to shift the blame on to a court if it come to that for enforcing state law and making CPS pay the CTPF what it is entitled to.

On don’t worry NPS, CPS will make cuts too and blame those on others. They may even void out the CTU contract, it will get ugly for sure. But it will play out in slow motion all the while creating more costs for the tax payers of Chicago.

Comment by Rod Thursday, Dec 8, 16 @ 3:41 pm
Why isn’t the outrage focused at Daley. Rauner didn’t take the CPS pension fund which was fully funded before the City took a decade long pass on contributions. Rauner is 100 percent right to hold out for what Cullerton AGREED to

Comment by Sue Thursday, Dec 8, 16 @ 3:43 pm
===How does this hurt the students?===

Willfully ignorant.

===Governor Rauner didn’t mismanage the CPS budget for decades.===

Your talking point des not negate today

Rauner hurt Chicago students with the Veto

That’s how it works…

Comment by Oswego Willy Thursday, Dec 8, 16 @ 3:44 pm
Rich,
Didn’t the Dems renege on their promise to pass the pension bill in exchange for the $215 million?
Didn’t they make that quid pro quo agreement? That’s how I remember it.
Am I incorrect? If so, in what way. Please explain. If my view in at odds with the facts, I’d like to know.

Comment by jim Thursday, Dec 8, 16 @ 3:44 pm
===renege on their promise to pass===

They had over a month left to pass the bill. Start paying attention.

Comment by Rich Miller Thursday, Dec 8, 16 @ 3:49 pm
one more time….. no change will be allowed to pensions for existing employees… you can shift costs to the school districts and Universities but you can’t diminish or impair pensions for current workers. Even without the pension clasue state and federal contract law would not allow. Any law pasted would fail in court…..

Comment by illdoc Thursday, Dec 8, 16 @ 3:55 pm
Here is a change which would pass muster- outlaw all employer pick-ups forcing employees to pay for their own contributions Statewide freeing the public employers to have more money for pressing needs. Nothing illegal with that type of change

Comment by Sue Thursday, Dec 8, 16 @ 4:20 pm
Sue, if government should be run more like a business, there would be no employee contributions.

From the BLS: “In the private sector, defined benefit plans are typically funded exclusively by employer contributions.”

http://www.bls.gov/bls/glossary.htm#D

Comment by Precinct Captain Thursday, Dec 8, 16 @ 4:30 pm
And on public pensions in general, ” On average, about 88% of the ARC was received by the largest state and local retirement systems in the country in 2008. Most funds (about 6 in 10) received payment for the full amount of their ARC or something close to it in 2008.”

http://assets.aarp.org/www.aarp.org_/articles/work/contribution-requirements.pdf

Only the dereliction of the employers in our state have caused our crisis. Paying up, as Governor Quinn did, is what we must do.

Comment by Precinct Captain Thursday, Dec 8, 16 @ 4:34 pm
Pass a budget with a glaring hole in it, but highlight the glaring hole and offer a hopeful remedy.

I do love and always have loved Frank Clark. Quiet, smart, pragmatic. A gent’s gent.

Comment by A guy Thursday, Dec 8, 16 @ 4:37 pm
Precinct- if Illinois was a private employer- the pensions would be over at the PBGC and benefits would be slashed to statutory minimum. Sounds like a plan- every public employer in Illinois needs relief- it would help them all having the employees contribute their required amounts. But I guess that is too novel for all of us

Comment by Sue Thursday, Dec 8, 16 @ 4:49 pm
–They can either stand for taxpayers who are demanding fiscal sanity from Springfield,…–

$13 billion FY17 deficit, $14 billion backlog of bills by June 30.

Tell us more about this “fiscal sanity” you speak of…..

Comment by wordslinger Thursday, Dec 8, 16 @ 5:17 pm
Our elected officials are doing a great job. Let raise taxes. Let’s not let rahm down.

Comment by Pass the 420 Thursday, Dec 8, 16 @ 8:43 pm
=freeing the public employers to have more money for pressing needs. Nothing illegal with that type of change=

That is called “cost shift” and it has been a topic of discussion for 5 years.

Good luck, by the way. Employees will fight hard for that money. And teachers usually get the public support during a strike.

=if Illinois was a private employer- the pensions would be over at the PBGC and benefits would be slashed to statutory minimum.=

No, they wouldn’t. The comparison is social security which requires and employee and employer contribution (lower than the current pension contribution for Tier 1). While the SSI benefit is lower, so are the income levels taxed and, SSI has been the beneficiary of multiple taxpayer financed bailouts. My money went to that although I won’t get more than 10% of my contribution.

Tier 2 is fully covered by the employee, that IS pension reform.

Comment by JS Mill Thursday, Dec 8, 16 @ 8:55 pm
I am from Chicago, and even I must admit that if we solve the Chicago Public School pension problem, we take the pressure off the larger state pension problem. It’s entirely reasonable (to me) to solve all pension problems together.

I also object to just giving my own school district a huge check with no reforms. It just delays fixing the underlying problem another year.

Comment by Just Me Thursday, Dec 8, 16 @ 10:54 pm
The law is if an employee is made to increase their contribution then there must be a corresponding increase in benefits….

Comment by Illdoc Friday, Dec 9, 16 @ 9:15 am