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* One of the weirdest developments of the spring session…
Despite Chicago Public Schools’ financial straits, a state investigation concluded the district’s books don’t warrant an intervention from Springfield.
The Illinois State Board of Education’s finding that CPS is not in “financial difficulty” as defined by state law represents a blow to Gov. Bruce Rauner’s efforts to give the state greater control over district finances. […]
“It’s clear in our analysis CPS has financial challenges and a spending problem,” ISBE spokeswoman Laine Evans said in a statement. “However, at this time they do not meet the criteria for certification of financial difficulty, as defined per statute. ISBE will continue to monitor the situation and the district’s finances.”
CPS spokeswoman Emily Bittner said in a statement that ISBE’s “decision demonstrates that Gov. Rauner’s attempts to drive CPS into bankruptcy are misguided and wrong.”
* Sun-Times…
“The district has not realized two consecutive years of negative operating fund balances, nor is it forecasted in this model,” ISBE wrote in the report.
CPS faces a $1.1 billion deficit in the new fiscal year starting July 1, and has been hoarding cash to make a massive pension payment on June 30. It passed last year’s budget with a $480 million gap and has been begging Springfield to help ever since, borrowing hundreds of millions at sky-high interest rates in the meantime. The district has also argued it is exempt from ISBE oversight and has been lobbying for a change to the state funding formula for schools. […]
In February, when the investigation was announced, Rauner said “The state’s going to be ready to come in and take action.”
Blaming CPS’ spending woes on its contracts with the Chicago Teachers Union, he continued, “I believe a state takeover is appropriate.”
He even began looking for a superintendent to replace CPS CEO Forrest Claypool.
* And…
The district must make a $675 million pension payment next month. Officials say they can only cover that bill with short-term borrowing and that the Legislature must rectify problems with the statewide school-funding formula.
“You don’t need an actuary or an accountant to know CPS has financial problems,” Rauner spokeswoman Catherine Kelly said in a statement. “Otherwise, the district wouldn’t be repeatedly asking the state for an additional half a billion dollars.”
* One more…
The decision not to declare the district in financial difficulty could suggest recognition by the Rauner-appointed state school board that it lacked proper legal footing to take over CPS in the first place, a Democratic legislative source said.
In April, Democratic Attorney General Lisa Madigan issued an opinion that the state lacks the authority to take control of the school system’s finances, including its ability to borrow to help fund operational costs.
OK, so CPS got Rauner off its back, but isn’t it tougher to get money from Springfield if they’re not actually on the verge of chaos?
* Meanwhile…
“Suburbanites don’t want to bail out Chicago, but that doesn’t mean we don’t want to see Chicago succeed,” [Sen. Matt Murphy, R-Palatine] said. “And if there’s a way to make our education funding system better, we’re open to that. But understand, part of the reason Chicago is getting less money than last year is that they have fewer students. You know, when we talk about closing schools, (Emanuel) did close 50 schools and I give him credit for standing up and fighting to do that. I think he did the right thing when he tried to do that last time. But they have 100 more that are really, you know, adult employment centers serving as schools. They need to do more in that regard.”
Murphy is resurrecting the kind of scorched-earth rhetoric from a quarter-century ago at the Capitol, when the city-versus-suburbs dynamic raged mightily. Then-Republican Senate Minority Leader James “Pate” Philip of Wood Dale famously likened the flow of state money to CPS to pouring “money down a rat hole.”
For Murphy, Emanuel’s argument doesn’t hold water in light of the Democrats’ long-held control of the legislature.
“Ask yourself, do you really think this system is set up to be to the detriment of Chicago, when Chicago Democrats have run Illinois for years? It just doesn’t pass the smell test,” Murphy told WLS-890 AM reporter Bill Cameron on the “Connected to Chicago” program that aired Sunday and can be listened to here.
*** UPDATE *** The governor’s react…
A staff report for the ISBE says CPS may be in potential difficulty, but not so bad that it qualifies for the state takeover that Governor Rauner has been threatening. He is shaking his head.
“To say that I was a bit surprised by that decision would be an understatement,” he said. “On one hand, we’ve got Forrest Claypool and Mayor Rahm Emanuel screaming fire, disaster, mass layoffs, huge financial crisis and on another hand we’ve got a state agency, a state bureaucracy, saying things aren’t so bad.”
The governor says he wants to get to the bottom of that.
posted by Rich Miller
Monday, May 9, 16 @ 9:06 am
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Does the ISBE staff that came to this conclusion actually operate independently of the governor’s hand-picked superintendent and the Superstars?
Does the Secretary of Education (not a real thing, but a cool title) have a role?
Perhaps wiser Superstar heads prevailed, and the governor realized he has enough on his plate already without taking full, daily responsibility for CPS.
Seriously, do you think he wants to be running CPS if there’s a strike? Let Emanuel have that headache.
Comment by wordslinger Monday, May 9, 16 @ 9:28 am
This might be a case of Rauner knowing what he was doing. Guessing, but seems likely Rauner knew that the state couldn’t take over CPS, the law is pretty clear on that. But he ginned up that talk in an effort to make CPS look worse to investors, knowing that CPS is completely reliant on the bond market to stay afloat at the moment. ISBE now comes out and says, CPS isn’t in bad shape, which torpedoes almost any chance for CPS to get the money it needs. The hope is probably to drive a wedge between the Senate, House, and Rahm on CPS as a means to get the Turnaround agenda done.
Comment by From the 'Dale to HP Monday, May 9, 16 @ 9:28 am
=OK, so CPS got Rauner off its back, but isn’t it tougher to get money from Springfield if they’re not actually on the verge of chaos=
And shouldn’t it be tougher now for CPS to get concessions from CTU?
And shouldn’t the ratings agencies re-assess CPS’s “bankrupt” rating?
Comment by TinyDancer(FKA Sue) Monday, May 9, 16 @ 9:29 am
Democrats deserve lots of Blame, especially Richard M Daley. But for Murphy to ignore his party’s role in this is completely ignorant of history. CPS’s main funding problem is almost completely attributable to pension costs. Those problems were caused by the Chicago school reform act of 1995, passed by Pate and Daniels and signed by Edgar. They eliminated Chicago’s teachers pension tax levy and gave The new Mayor appointed school board legal authorization to skip pension payments. That alone put a $480 million hole in this year’s CPS budget
Murphy and the Republicans used to be correct about Chicago getting a disproportionate amount of state funding, but that imbalance ended once the General assembly started making full payments to TRS. That accounts for more than $7 billion going to every school district in the state except of Chicago. As a result, the state funding imbalance today swings in the opposite direction. Facts are rarely red herrings.
Comment by A red herring worth $7 billion Monday, May 9, 16 @ 9:32 am
This is the way independent government agencies should operate.
Then again, as Rich correctly points out, if CPS is not defined as being in =financial difficulty= then it seems much harder to make the case they need emergency state support.
That must be some definition.
Comment by Formerly Known As... Monday, May 9, 16 @ 9:37 am
Or it could be what @wordslinger suggests.
The whole thing is a mess. Ideally they made this decision based on facts and the state’s definition, not just following orders.
Maybe we are too skeptical after the Blago and Quinn years, or maybe nothing has changed in Illinois.
Comment by Formerly Known As... Monday, May 9, 16 @ 9:42 am
Manar was also foiled by ISBE. All in all an up week last week for ISBE.
Comment by Big Muddy Monday, May 9, 16 @ 9:43 am
It would seem that much of the same could and should be said of the Universities’ budget “crisis”. This state should implement, as have many others, consolidation of common administrative services to reduce costs. If the taxpayers are going to pay the bill, every effort should be made to eliminate redundant overhead, don’t you think? Ultimately,it is the students who will benefit by reducing the cost of a college degree. On-line degree offerings would also save by reducing physical classrooms and facilities. In this internet era, why do we think we need to conduct all our classes with the same methods we used when Lincoln was a student? In addition to being a former educator, I am also a taxpayer, and it is obvious we are very, very wasteful. Students deserve better and so do the taxpayers of Illinois. State universities need to come together to help resolve this, rather than “each for themselves”.
Comment by rpatel Monday, May 9, 16 @ 9:52 am
==From the ‘Dale to HP - Monday, May 9, 16 @ 9:28 am:==
You are on to something here. Rauner’s plan is to break CTU by financially breaking CPS.
Comment by Mama Monday, May 9, 16 @ 10:04 am
“On-line degree offerings would also save by reducing physical classrooms and facilities. ”
By going this route 100%, how would the students learn to show up and be on time for their future jobs?
You need both physical classrooms with teachers and online classes.
Comment by Mama Monday, May 9, 16 @ 10:08 am
=Facts are rarely red herrings.= Except when they are not facts. That $7 billion you are talking about is a debt payment. It covers debt from a time when Chicago’s pension was more than 100% funded (part of the reason they were allowed to skip payments)
CPS does get more than their share of funding from the state. The Block Grant, PTELL offset, Special Ed funding all tilt the funding levels in CPS’ favor even without the pension pickup.
=On-line degree offerings would also save by reducing physical classrooms and facilities.=
When was the last time you took or explored taking a college course? From your post it has been a significant amount of time. There are many on-line offerings but 100% won’t work for everyone.
To the main topic- The ISBE simply does not have the capacity to run CPS. It is stripped out and filled with “consultants” but it probably didn’t have the capacity in it’s heyday before Blago cut capacity.
Comment by JS Mill Monday, May 9, 16 @ 11:04 am
This makes Rauner look foolish and impulsive.
But I think there is an important lesson here for the Rauner team. It helps to have buy-in from the government agencies who do the work and implement policies.
You can’t make broad policy pronouncements that will create oodles of work for ISBE and expect them to issue a report supporting it - if they don’t agree. Maybe ask the department what they think first?
Maybe talk to the government you are supposed to be in charge of before you throw crap like this on the wall next time.
Believe it or not, “government workers” actually understand their jobs and they have good ideas about public policy.
This makes Rauner look foolish.
Comment by siriusly Monday, May 9, 16 @ 11:20 am
Murphy is to the residents of Palatine what Dunkin is to the residents of Chicago.
Comment by IRLJ Monday, May 9, 16 @ 11:43 am
I’ve observed some of the “state takeovers” (Hazelcrest comes to mind) and I’ve met some of those put in charge. First, the “administrators” put in charge are typically retired admins on fat pensions who get even fatter salaries to do this work. Most are from suburban districts where cost cutting and running efficient operations is about the only thing that can get an admin fired. They cant’ touch the union salary schedule, no matter how excessive, and adjust work load to make it fairer, and larger. They CAN, however, stick the taxpayers with a bigger bill to pay for the district’s largesse. They do this in just about every takeover case.
Unfortunately, communities have been electing some of the most corrupt school boards who turn the system into a patronage haven that would make Chicago Streets and Sanitation blush. Thornton HS district spending $19K per year per student, the same as Hinsdale, with an average ACT score two or three points below state average? The state won’t break up the corruption and patronage systems, so what’s the point?
Comment by Anonymous Monday, May 9, 16 @ 11:55 am
===has been lobbying for a change to the state funding formula for schools.===
I think that something better for the CPS to lobby for is the ability to raise property taxes more than the current law allows.
===“Suburbanites don’t want to bail out Chicago===
With Chicago having the lowest property tax rate in Cook County I cannot see why suburban tax payers would want to increase their taxes so that they can stay so low in Chicago.
Comment by Hit or Miss Monday, May 9, 16 @ 12:23 pm
= @JS Mill =
You’re right, if you don’t count pension related funding, CPS gets more on a per-pupil basis than downstate and suburban districts, thanks to the block grants. But not counting pension-spending is kinda ridiculous — we’re not talking about a rounding error here. The state spends as much on pension payments (mostly to TRS) as it does on the regular K-12 education budget. If “debt payments” — as you put it — don’t count, then the state doesn’t have a spending problem after all.
The truth is, pension payments have become the great education funding equalizer between Chicago and the rest of the state. Chicago gets more per-pupil spending, every other district gets a whole lot more pension spending.
Comment by Fred H Monday, May 9, 16 @ 3:54 pm
“The governor says he wants to get to the bottom of that.”
Translation: He is going get his own lackeys to write the report the way he wants it to be written.
Comment by Huh? Monday, May 9, 16 @ 5:24 pm
I hope Laine Evans still has a job.
Comment by Mama Monday, May 9, 16 @ 7:40 pm
–“To say that I was a bit surprised by that decision would be an understatement,” he (Rauner) said. “On one hand, we’ve got Forrest Claypool and Mayor Rahm Emanuel screaming fire, disaster, mass layoffs, huge financial crisis and on another hand we’ve got a state agency, a state bureaucracy, saying things aren’t so bad.”–
Yeah, Meeks and the state sup. flunky looked over the books and bucked Rauner.
You can actually laugh at this shallow perfidy, as the CPS kids are still going to school, despite all the sturm und drang.
He is so sure we’re all so stupid.
Rauner figured out that if he took over CPS he’d be dealing with tens of thousands of honked off parents who ain’t interested in the Trump Tower dorm-room yak-fests about the beauty of forcing bankruptcy.
By now, we all must be aware that Rauner ain’t so much into responsibility and accountability. Let Emanuel take the heat.
Remember when “bankruptcy” was a dirty word among “conservatives?” Those were the good old days, in the Illinois GOP
But seniors are missing meals, homeless kids are out in the street, and rape victims have no one to turn to, because the likes of Catholic Charities and Lutheran Social Services are getting stiffed by our deadbeat government.
Meanwhile, universities are bleeding to death, Illinois businesses aren’t getting paid, the state is tripling debt — all of these are “shake em up” improvements Gov. Rauner has visited upon us in his short time in office.
The question, regarding all this unjustified destruction:
Is Rauner naive and irresponsible? Or is he just tuning up the people and institutions that he doesn’t value very much?
Rauner ain’t stupid. He’s the governor. He didn’t put millions into Ken Dunkin because he thought he was John Locke.
Rauner know’s exactly what he’s doing, and he’s doing it well.
So the answer is, this is the plan.
Show me how I’m wrong.
Comment by wordslinger Monday, May 9, 16 @ 10:42 pm
==Suburbanites don’t want to bail out Chicago==
(Sen. Matt Murphy, R-Palatine)
Excuse me, but isn’t it the other way around.
Which town contributes more in state taxes, Palatine or Chicago?
Comment by TinyDancer(FKA Sue) Tuesday, May 10, 16 @ 12:12 pm