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Is CPS bluffing?

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Those of you who have been around a few years will remember how things used to be at the Chicago Transit Authority. Every year or two, the agency would suffer one of its inevitable financial crises. Without enough cash to pay the bills, whoever was the boss at the time would throw a five-alarm news conference, vowing to shut half the el stops, limit bus service to daylight hours every other Tuesday, and otherwise force everyone to walk 10 miles to work.

Eventually, the CTA’s financial situation stabilized. But the lesson of “let’s hold our breath until we turn blue and scare the bejabbers out of everybody” apparently was not lost on Forrest Claypool, the ex-CTA boss who now runs Chicago Public Schools and is threatening to shut down CPS almost three weeks early in June because he can’t pay the bills. He and Mayor Rahm Emanuel loudly blame the shortfall on Gov. Bruce Rauner, who they say reneged on a deal to provide $215 million for CPS pensions.

There’s merit to Claypool’s claim, although the situation is more complicated than he suggests. But I have come to suspect that his threat to toss the kiddies out onto the mean streets isn’t real as much as a means to whip up parents to contact their lawmakers and demand that CPS get that $215 million tout de suite! […]

can’t see Emanuel raising property taxes further. Nor can I see him following Lewis’ advice to “go where the money is” and hit up the rich and/or bring back the hated employee head tax. And the tax-increment financing program just doesn’t have the $400 million-plus in excess cash that would legally be needed to give CPS $215 million right now.

That leaves borrowing, which would be extremely expensive, given CPS’ abysmal credit rating, but perhaps possible in small amounts. And/or a shorter early recess, more layoffs of those hated CPS bureaucrats or a delay of a few weeks in a huge $721 million pension payment CPS is scheduled to make by June 30. In other words, something ugly, short-term and unsustainable. Somehow, it fits at CPS.

Also, CPS’ budget is so opaque it’s difficult to tell if they’re being honest about their finances.

posted by Rich Miller
Monday, Apr 17, 17 @ 1:04 pm

Comments

“”Is CPS bluffing?”"

Is it Monday?

Comment by walker Monday, Apr 17, 17 @ 1:15 pm
Lots of administrative fat to cut at CPS. Layoff more people downtown to free up cash for actual schools. Should have been done 20 years ago.

Comment by Ron Monday, Apr 17, 17 @ 1:23 pm
Greg Hinz is totally correct on how a TIF rebate works and its something many in this town don’t understand. All the recipients of property taxes (Taxing Districts) have to get money back when a rebate is done not just CPS, everything from the Chicago Community College District to Cook County Forest Preserve District.

Comment by Rod Monday, Apr 17, 17 @ 1:23 pm
A city earnings tax is a viable solution. what is Rahm afraid of ? Businesses leaving .

Comment by blue dog dem Monday, Apr 17, 17 @ 1:48 pm
Reminds me that it was over a year ago that Chicago State send out potential termination notices to all its employees.

Comment by Downstate Monday, Apr 17, 17 @ 1:51 pm
I wouldn’t call it a bluff, to bluff you have to be trying to outwit your enemy. Rauner has never expected support out of Chicago so he will continue to offer benign neglect. Instead this is a Democratic in-fight issue as CPS and Emanuel are really different parts of one creature.

Comment by Texas Red Monday, Apr 17, 17 @ 1:53 pm
Is CPS bluffing?

Sadly, no. They believe the gunk they spew. Bluffing would require a more intellectual approach.

Comment by A guy Monday, Apr 17, 17 @ 1:54 pm
Rich’s last paragraph states probablem. How about a transparent budget?

Comment by DuPage Saint Monday, Apr 17, 17 @ 2:18 pm
Everyone knows CPS budget was precariously balanced and then Rauner blows $215 million hole in the second semester. CPS borrowed to the limits. Nobody questions that. Obviously, it’s a horrible situation – – and it’s driven by the $750 million CPS has to pay for pensions, which no other school district has to make. So yeah, it’s real.

Comment by CPS parent Monday, Apr 17, 17 @ 2:18 pm
CPSParent. We folks down in southern Illinois dont care anymore, due in simple fact that ya’ll have mismanaged your finances for decades. I believe YOUR elected representatives made the call to forgo the pension pickup.

Comment by blue dog dem Monday, Apr 17, 17 @ 2:27 pm
To Ron: I am not sure that you have seen the reduced size of the current CPS HQ at 1 North Dearborn. The problem at CPS is not the number of administrators on the payroll anymore, its in part the cost of consultants that now play that role. This isn’t Michael Scott’s big CPS operation any more, whose own body was found, face-down, submerged from head to waist in the shallow water of the Chicago River in 2009. Those days of hidden positions at CPS died largely with him and new forms of corruption were transitioned into by Barbra Byrd Bennett using consulting firms.

CPS has gotten itself into a very difficult situation and picking up the $215 million will not fix it for more than one year. The kind and type of austerity CPS would have to impose to fix the situation without more money makes politicians unnerved. It means a massive consolidation of schools siting well below reasonable occupancy levels, the layoff of many teachers, aides, principals, etc. Some students even in elementary schools traveling significant distances. Meanwhile CPS is losing students each and every year, along with general state aide dollars based on enrollment figures.

The early school year shut down is a real possibility and even that does not make CPS whole.

Comment by Rod Monday, Apr 17, 17 @ 2:40 pm
Why is CPS entitled to an extra 215 million dollars to pay exorbitant pension over last years budget?

What if every other school district in the state asked for a proportional increase?

Chicago property tax payers got hit with a pretty significant property tax and fee increases that won’t start to hit up their pocket until next Fall

Forrest Claypool insisted that the teachers must pick up their entire 9 percent share of the pensions instead of the 2 percent they are paying currently

Of course he backed down and now he is stuck having to pay the 215 million dollars

The Governor has offered to pick up the pension contribution this year if legislators pass the Cullerton pension plan

Is the state just supposed to keep coughing up more and more money?

Comment by Lucky Pierre Monday, Apr 17, 17 @ 2:44 pm
CPS spent $350 per student on general administration in 2014.

That’s below the Illinois average but almost 70% above the national norm and nearly four times more than New York City and Los Angeles, where administrative spending is less than $100 per pupil.

Comment by Ron Monday, Apr 17, 17 @ 2:45 pm
Let them shut down, in fact disband the district and start over with smaller districts that have greater accountability. This problem is of their own doing. My district make do with less per pupil money but with an equally high free and reduced lunch population. Balanced budgets and far better student outcomes. It isn’t the money, it’s the organization of the school.

Comment by NeverPoliticallyCorrect Monday, Apr 17, 17 @ 2:45 pm
What Greg Hinz forgets is that in 2008 the legislature passed structural reforms to the RTA and CTA.

Comment by Just Me Monday, Apr 17, 17 @ 2:49 pm
===Why is CPS entitled to an extra 215 million dollars to pay exorbitant pension over last years budget?===

It was agreed to, by all parties, including Rauner. You know this. Why do you daily start over with things you know Steve true?

===The Governor has offered to pick up the pension contribution this year if…===

I’m going to stop you there.

Rauner vetoed the $215 million, purposely, before any “if” could occur.

This is the first time you are being reminded about the Rauner veto of the $215 million, done emotionally.

You should be applauding it, why aren’t you.

Rauner is scrambling to get back to it, after blowing it up, why is he? lol

Comment by Oswego Willy Monday, Apr 17, 17 @ 2:50 pm
“… was agreed to, by all parties, including Rauner. You know this. Why do you daily start over with things you know aren’t true?”

Apologies.

Comment by Oswego Willy Monday, Apr 17, 17 @ 2:52 pm
All the knee jerk CPS critics can have at it criticizing CPS for whatever failures you want, real and imagined, when you provide CPS students with the same resources as children in the rest of the state.

State of Illinois has admitted in court the truth behind CPS’s financial numbers – – 20% of the students but only 15% of the state funding. When the state stops its racial discrimination against poor black and brown kids at CPS, then and only then do you have the right to argue those resources are somehow being misused.

Comment by CPS Parent Monday, Apr 17, 17 @ 3:13 pm
== When the state stops its racial discrimination against poor black and brown kids

It is not a Springfield problem - when CPS starts answering to parents and taxpayers and not union bosses things will change.

Comment by Texas Red Monday, Apr 17, 17 @ 3:27 pm
So when CPS closes at the end of May Chicago Legislators are going to line up to vote for a stop gap budget to open all schools in the fall.

Comment by Peters Post Monday, Apr 17, 17 @ 3:32 pm
the schools do need more money…more than the admin fat they can cut….but Forrest is starting to be a bit more political than one would expect. and also not doing as he preaches, what with the out of Chicago folks on the payroll. he was more of a reformer in the past.

Comment by Amalia Monday, Apr 17, 17 @ 4:08 pm
‘Real and imagined’? And by the way, only racists make the argument that you can’t debate issues without being called out for disputing ones position.

Comment by blue dog dem Monday, Apr 17, 17 @ 4:13 pm
With the lowest property tax rate in Cook County, there is still an opportunity to consider a property tax increase for CPS.

Comment by Hit or Miss Monday, Apr 17, 17 @ 5:07 pm
Peters Post: I suspect that if CPS does shut down early it might have no impact on a stop gap k-12 budget one way or the other. By the way without a stop gap budget CPS might be able to open for a while, it could have enough property tax receipts and a line of credit to open and stay open for a number of months.

The number of school districts that simply could not open their doors at all without general state aid is really unknown and ISBE has never discussed this issue publicly as far as I can see. But if you go to https://www.isbe.net/Pages/School-District-Financial-Profile.aspx you will see that of 852 school districts about 267 have zero or limited reserves. So a reasonable guess is that about 69% of school districts could open their doors without a k-12 budget, but for how long I have no idea. There are apparently a few districts that could go a full year without State funding.

Some Illinois school districts have been stock piling money for the big rainy day for a while (see http://www.dailyherald.com/article/20170412/news/170419677/ )

Comment by Rod Monday, Apr 17, 17 @ 5:16 pm
OW when dd Rauner agree to pay the 215 million?

You fail to mention there was a quid for that pro

Why try to pull the wool over everyone’s eyes?

Comment by Lucky Pierre Monday, Apr 17, 17 @ 8:28 pm
===OW when dd Rauner agree to pay the 215 million?

You fail to mention…===

I’m going to stop you there.

By saying Rauner, emotionally, vetoed the $215 million, I’d figured you’d understand that Rauner prematurely vetoed the bill.

You should cheer that. Rauner taught a lesson that wasn’t neede md to be taught, but learned that governors own vetoes, as Chance demands Rauner to do his job.

Now you’re “caught up”… again, lol

===Why try to pull the wool over everyone’s eyes?===

I figured Chance was doing a good enough job as it is, lol

Comment by Oswego Willy Monday, Apr 17, 17 @ 8:34 pm