Recreational Pot comes to Illinois

The first day of 2020 in Illinois will bring more than a hangover to many victimized from the previous night’s revelry, it will also be the first day that recreational marijuana can be sold, as it becomes the 11th state in the nation to allow recreational marijuana for sale, a dream come true for those who smoked it furtively in 1970s college dorm rooms, and who are now grandparents, with maybe just a hankering for what was known to them as “killer weed”,  used either as a term of jocular affection, or a description of the herb’s superior quality.

With the support of State Sen. Heather Steans (D-Chicago) and State Rep. Kelly Cassidy (D-Chicago) who labeled themselves, affectionately, as “The Cannabis Queens” in a concerted effort to fill the state coffers with much needed funds to solve pension deficits, for both the state, and the third largest city in the United States, but who are first in pension woes, which have made a dent of $838 million in an already weak financial base.

Reception to the news has brought both picks and pans with the roll out, some worried about the dangers of over consumption, and some about the health of teenagers, and some feeling that it’s just plain wrong.

All of that fell beneath the push from Illinois Gov. JB Pritzker who made it a legislative priority, after his inauguration, with expected revenue of $5 million, or more, but two Chicago aldermen felt that those who were promised priority licensing, and who had been the  target of the old illegality were not going to gain the promised priority for licensing and help for facilities, but all things being political, in Chicago, there was more than meets the eye, to jaundiced City Hall observers..

The law stipulates that only those 21 years old, and above may purchase 30 grams  “of marijuana plant material, edibles totaling no more than 500mg of THC, and five grams of cannabis concentrate products. Non-residents will be able to purchase half those amounts,” reported ABC 7,

While advocates, including lawmakers, say that the new law will help drive street dealers away and thus reduce crime, some are saying that isn’t so and a recent interview with one such dealer in the alternative paper, “The Reader” gave support that some buyers will not want to pony up the necessary id, face the retail outlets, or just plainly speaking, sustain an ongoing relationship, and possibly lower prices. Only time will tell, but long lines are expected and as of this notice only cash will be accepted.

One of the fiercest debates surrounded social equity of sales to black and brown people who were the frequent targets of illegality, and that is where a great deal of heat and light was debated.

The piles of paperwork and rules and regulations and money were daunting for many people and in other states, where it has been tried, the success rate has been mixed.

Added to the mix were consultants at the ready for advisement, but also at high prices, high enough to keep those desiring entry, out of the entrepreneurial feeding trough.

What made the effort distinctive, as well as difficult was highlighted in recent coverage by Crain’s Chicago Business, where it noted that “As the 11th state to approve recreational marijuana, Illinois has taken the concept of social equity to a new level. While other states scrambled to implement legal weed after it was approved in voter referendums, Illinois was the first to design legislation with the social equity goals in mind, something advocates promised in order to win enough votes for passage last spring after months of intense negotiations.”

Furthermore was Pritzker’s statement: "I want to create millionaires in communities that have been left out and left behind," said Gov. J.B. Pritzker.

Getting it right is paramount for Illinois, but yet, reality bites, and “Social equity efforts have largely come up short in Colorado, Washington, California and other states that have tried before Illinois. And the states own record of diversity with marijuana entrepreneurship has not been promising: None of the first 55 medical dispensary licenses awarded by Illinois is held by a minority-owned applicant. The same is true for cultivation licenses.”

Steans when interviewed, said, somewhat ruefully, “"We're not going to know until the licenses are issued whether it worked and we really get the diversity we were hoping for."

“Marijuana Business Daily, a trade publication, found in a 2017 survey that African Americans account for just 4 percent of cannabis business owners and founders, though they make up more than 13 percent of the population,” was the harsh fact reported by Crain’s.

Taking it from the top, this is big business, and “With the recreational market estimated to generate $2 billion in annual sales, a single dispensary could bring in $5 million to $10 million a year in revenue, potentially making a license worth $5 million to $15 million,” noted.Crain’s.

The nitty gritty revealed some good intentions, but as St. Theresa noted, good intentions can often lead to hell, or in this case more for the alleged “man”, than the man on the streets.

“During negotiations, advocates came up with a novel approach that says applicants who qualify for social equity status will get 50 points toward the possible 250 points available for a dispensary application, based on where the majority owners lived or a prior marijuana arrest record. But it doesn't set out a quota of how many of the 75 licenses they will receive.

Social equity applicants also will be charged an application fee of only $2,500, half of what the state will charge others.”

That road also led, perhaps, to the law of unintended consequences, or simple expedience, that the 55 dispensaries that are currently selling medical marijuana, the right to also sell recreational stuff on Jan. 1, and they are mostly white men.

As a footnote, “The first new dispensary licenses won't be issued until May, and it could be a full year after recreational sales begin before they're operational. That gives incumbents a head start, especially when it comes to locations in the city, which are limited by zoning.”.

Keeping it real, Crain’s also reported one of those intended targets, who said, "How is this not rigged? It doesn't make sense," Jonathan Smith, a Chicago resident, said during a public hearing in October at Kennedy-King College in Englewood. "If it's just for some people, just say so."

Trying to gain traction was another rule: “One is for principal owners to have resided for five of the past 10 years in an area that has high rates of poverty and unemployment and that was “disproportionately affected” by the drug war, in which for decades law enforcement targeted people of color for arrest and incarceration despite research showing that marijuana use is fairly equal among racial groups.”

In late December, the State of Illinois began the application period for the first $21 million Low Cost Loan Program, that was part of the law. The resulting Cannabis Business Development Fund supports social equity applicants and licensure., and are living in a Disproportionately Impacted Area, and the revenue stream is from the licensing fees of the first group of dispensaries, among other resources.

These low-interest loans are part of the Pritzker support.

Stepping up to the plate is Cresco Labs who have vowed to work as “a catalyst for some incredible, positive change,” said CEO Charlie Bachtell, in interviews.

The train has not left the station, and the jury is still out, but taking some political shots at Chicago’s new mayor, Lori Lightfoot, two local aldermen, using equity goals as political cover, tried to derail the Chicago effort, in an effort to embarrass her, was Alds. Carrie Austin and Anthony Beale, who in December wanted “Chicago sales of recreational marijuana . . . pushed back until July 1 under an ordinance that squeaked through a City Council committee.  . . at the behest of black aldermen demanding diversity among dispensary ownership.”

“The 10 to 9 vote by the City Council’s Committee on Contract Oversight and Equity was a political embarrassment to Mayor Lori Lightfoot, whose administration tried desperately to appease the Black Caucus during negotiations that continued during the meeting” reported The Chicago Sun Times

That was later defeated and attentive observers noted that Austin, whose office was raided by the Feds recently for footloose games with property ownership, faced further scrutiny by Lightfoot, and Beale who lost his prime spot as Transportation, and the mayor replaced Austin as Budget Director, with Pat Dowell.

Beale had warned Lightfoot “that if she insisted on pushing Ald. Scott Waguespack as Finance Committee chairman, whom Beale claimed doesn’t “play well with others,” she might be picking a fight with the new City Council she cannot win.” And, he learned a lesson, as well, according to the Sun-Times.

As local Chicago Tribune columnist John Kass noted, when covering the recent teachers strike that the mayor learned that “revenge is a dish best served cold.”

One key issue, for those living in federally subsidized housing is eviction for using; not just a joint, but even cannabis infused gummy bears, or cosmetics containing CBD, even though the latter was legalized last year, and especially pain relievers, used by senior residents.

Various approaches have been suggested but there is, as of this date, no uniform policy, despite a much publicized eviction of a New York man in 2018, while the U.S. Department of Housing and Urban Development, in 2011 advised a case- by- case determination.

To no one’s real surprise the Trump administration “rescinded an Obama administration policy that had eased enforcement of federal marijuana laws in states that legalized the drug,” reported Inside Publications, a Chicago community newspaper.

Local law enforcement has also not found an unequivocal method of testing impaired drivers.

With increased anticipation and those long lines of cash bearing buyers, some in the local business community have criticized the mayoral designed zoning districts that prevent sales from along Chicago’s famed Mag mile, notably Joe Cahill in Crain’s who blamed it all on Lightfoot’s desire to spread investment along the city’s South and West sides, what he called her social equity agenda.

Here is her plan: “the city would be divided into seven zones for recreational marijuana dispensaries. Each zone would be allowed up to seven dispensaries, with an increase to 14 in May. Dispensaries would be prohibited, however, from locating in a downtown "exclusion zone" in most of the Loop and Magnificent Mile,” according to the Tribune.

“Lightfoot's exclusion zone would squander her greatest opportunity for marijuana tax revenue. It also would blow the best chance to squeeze tax dollars out of suburbanites and out-of-towners, groups Lightfoot has singled out as free riders on city services.”

Ouch!

Yet, the mayor has said that she wants those areas to be “family friendly”, and we concur, as the blowback with the first incident of someone toking up outside the Disney Store would wreak public relations havoc, just as she tries to solve Chicago’s moribund finances.

All of this supports a change in attitude among Americans regarding pot usage, and has moved away from nearly thirty decades of disapproval to decriminalization and now recreational use of marijuana, and yet this seems like just the beginning for long term advocates, but a new day, as well, as a new year for many.

Help for Chicago schools to attract substitute teachers

Of the less celebrated heroes, and heroines, in Chicago Public Schools, are substitute teachers: those that fill the void of absent teachers. While subs have been the butt of jokes for generations, even outside of Hollywood films, where they have long been standard comic fare, with scenes of spitballs flying through the air, amidst their desperate cries of “Class! Class!” as they struggled to bring order to the classroom; but in the real world of an urban public school system, such as Chicago, they are a necessity.

A recent report from Chalkbeat.com noted that Chicago subs, and the schools that they served faced, mounting challenges: “Chicago has struggled to recruit substitute teachers, particularly in the era of the gig economy, where residents looking for part-time work can turn to Uber or Lyft.”

Most glaringly, they showed that “An investigation earlier this year found that one in three teacher absences at majority black and Latino schools went unfilled.”

To help alleviate the problem, was the news that “District leaders say some new efforts, from promised pay bumps for substituting at hard-to-fill schools to relaxing restrictions on retirees, are starting to pay off. The teachers’ union, too, has also advocated and won cost-of-living raises for substitutes across its new five-year contract.”

The investigative report that they cite is from Chicago’s local public radio station WBEZ, whose education reporter, Sarah Karp, reported in August that, “CPS also has a severe substitute teacher shortage, a WBEZ analysis shows. At 62 schools, half the time a teacher was absent no substitute showed up.”

In a city with a long, and persistent history of racial segregation, “Here, again, there is a racial disparity. When majority black and Latino Chicago public schools request a substitute to cover a class, subs didn’t show up 35% of the time, data from September 2018 through March 2019 shows. That’s compared to 20% at majority-white or racially-mixed schools. Substitute teachers can turn down any school assignment.”

Working on a case-by-case basis, local school teachers were forced to give piecemeal instruction, for general education classes, but faced severe challenges with students with special needs, Karp added..

With the growing shortage of teachers in these schools, and the recently negotiated teacher contract there has been some movement, and she noted making the school district more equitable is a constant priority for officials.

“And nothing gets to the heart of the district’s inequities more than the reality that some schools struggle securing teachers while others are fully staffed, said Matt Lyons, CPS' chief talent officer.”

Increasing sub pay to hard to fill schools and professional incentives to bolster credentials are some ways that can alleviate the problem, and Mayor Lori Lightfoot has pledged to study the problems of teacher gaps, and attrition, that lead to vacancies and structural problems.

“We’re really excited about the moves we’ve made,” said Lyons in his interview with Chalkbeat, stressing that, “We really evened out the inequities in a lot of ways.”

“The new agreement between the teachers’ union and Chicago Public Schools awards substitutes annual cost-of-living raises of 3% to 3.5% over five years. That will boosts daily rates that currently start at $122 for day-to-day substitutes without teaching degrees to $226 for displaced teachers who have been waiting over a year to be rehired.”

Leading the way to further help was, “For the heart of the substitute corps — so-called cadre teachers who are on the payroll to accept most any assignment — the district lowered to three the average number of days per week they must accept jobs that come their way. Retired teachers can also work 120 days, up from 100, without losing their pension — a move in line with a new state law.”

Entering the fray is California based Swing Education to match educators to qualified subs in their area, and in an email interview with Jerry Lee, Vice President of School Partnerships, we were able to focus on some of the more pertinent problems that face Chicago schools.

SWING has definitely filled a need for substitute teachers, and this seems especially an issue for large urban school districts. In filling this need how are you vetting subs for large school districts such as Chicago?

 “Our team at Swing views vetting substitute teachers for schools and districts as a two-part process. First and foremost, we take the utmost precaution to ensure that the substitute teachers who work with us have the right certifications and credentials and that they have passed all of the necessary screening and background checks.

Although we’re confident in the effectiveness of our initial vetting process, we also understand that not every substitute teacher will be the ideal fit for every classroom. That’s why we’ve developed this technology that helps in matching the right substitute teachers with the schools that need them.

Swing’s product, which is essentially an online marketplace that matches schools with qualified local substitute teachers, allows schools and districts to easily find and then build a network of their favorite and local Swing substitute teachers.  Our platform, which allows schools to record and provide feedback on every substitute teacher experience, empowers school admins to start building a community of their own favorite Swing substitute teachers. They can also immediately unlink subs that they find less desirable for their unique needs and profile. The result of this process is the best possible sub pool for all of our school partners.

On the substitute teacher side, our product allows people to easily accept substitute teaching opportunities on-the-go, as they have the option of reviewing, then accepting substitute teaching opportunities via text notifications. To make it even easier, we’ve recently introduced an iOS app for our substitute teacher community. Substitute teachers are also empowered to opt out of accepting requests from certain schools and/or districts -- it’s entirely their choice!”

WBEZ cited problems in filling sub requests in low income, black and brown schools; how does SWING handle this challenge? How does SWING market the service to attract Black and Latinx teachers, that might be better poised to fill the need cited in the piece.

“One thing we’re very proud of at Swing is that the majority of our substitute teachers are drawn from and reflect the schools, students and communities that we serve. We are able to attract and recruit talent to successfully fill requests in lower income, minority schools because of the following:

Focused, experienced team: We have a dedicated team of Marketing and operations professionals whose full-time jobs year-round is to proactively find, vet, recruit, and onboard subs through every channel possible (paid digital ads, email, events, social media, website, local university and teacher prep program partnerships, marketing collateral, and meetups).

Attractive, easy value proposition for our subs: We cover all onboarding costs for our subs, including background check and sub license costs, and make it easy for them to be notified and access school partner assignments in real-time, both online and via text messages. Our goal is to help eliminate any barriers of entry for qualified substitute teachers to start teaching and contributing in the classrooms. Costs associated with setup and onboarding costs may be a barrier, especially for substitute teachers in lower income neighborhoods -- we want to help in breaking down this barrier.

Track record serving challenging schools: We’ve proven our ability to find subs who are passionate about working in challenging schools across eight different states (most recently Chicago): campuses in lower-income communities with high FRL, ELL and SPED student populations and large student-to-teacher ratios. Substitute teachers with Swing, many of who grew up or live in the local community, successfully serve our school partners in Southeast Washington DC, the South and West wards of Newark, NJ, South Central and East Los Angeles, East and West Oakland, Northeast Nashville and all the boroughs of New York City. Our early school partners in Chicago are located on the South and West side, and we’re working to develop a similar reputation of successful and thoughtful partnership with these campuses.”   

Locally, here in Chicago, there is a real need for special education subs; how can this be addressed, specifically, by your organization?

“The approach above allows us to specifically target and recruit subs for a variety of different school needs in a much more nimble and customized way than most other organizations. We’re able to quickly post ads and “turn on” recruiting for specific roles across multiple channels to meet specific needs of our school partners. This is true for “special education”, which entails a broad scope of possible roles, from paraeducators to speech language pathologists to early intervention specialists. The latter positions typically require graduate degrees and full teaching licenses with specific endorsements, while there tends to be a more untapped and flexible supply for the former. Schools in almost every state we work in struggle to find special education subs and Swing has been particularly successful finding and matching paraprofessional types of subs for our school partners. “

It seems that by using the resources of the internet, that you can reach a wider pool of candidates; does this seem to be true, to you?

“The internet, especially with the adoption of social media, has definitely widened the pool of potential candidates that we can reach. New, digital ways of targeting specific audiences through platforms like Google and Facebook have also allowed companies like us to show relevant information and optimized content to people who are more likely to be interested in substitute teaching in their local communities. However, I think that word of mouth is still one of the more powerful forms of marketing channels when it comes to building awareness for your product or service. This is especially true in our case, because we focus a great deal on creating a seamless experience for all substitute teachers as they interact with our brand through multiple different touchpoints or channels.” 

SWING seems to be a very young organization; taking this into consideration, what do you attribute to its strong record of success?

“Our company’s background in K-12 education -- and the extent to which our leadership team experienced the pain of the substitute teacher shortage firsthand -- has been really helpful.

For instance, Swing’s co-founder and CEO, Mike Teng, spent five years as a K-12 tech director, developing and identifying a solution to the organization’s challenges with substitute teachers. That experience was truly an eye-opening experience, and it provided Mike with a valuable perspective on the impact of substitute teacher shortage on schools and students. It also allowed him to see how companies like Swing Education could one day partner with schools and districts to solve this problem.

I’d also say that we’ve been fortunate to have a really solid team at Swing as well as some very important school and district relationships. There are a lot of smart, passionate, and mission-driven individuals who work with us (both substitute teachers and HQ staff), and we’re backed by a group of supportive investors who care about educational outcomes as much as we do. Those factors, along with many, many discussions with new and old connections in K-12 education, have helped us grow quickly and serve our school and district customers well.”

 How does expansion for SWING affect its focus on quality?

“I think that the primary way expansion impacts our focus on quality is in the number of employees we have hired and dedicated to providing substitute teachers and school customers with a great experience.

In our early days, we worked with only a handful of substitute teachers and school customers. So we didn’t need a huge team.

Now that we’ve grown to more than 2,000 school customers across eight regions, we have a lot more people working in areas like support, success, and substitute teacher compliance (ensuring all substitute teachers have and maintain up-to-date and valid certifications).

In addition to allowing us to expand our operations, our growth has given us the opportunity to invest heavily in our product and engineering teams. Developing a free iOS app (and soon to be released Android app) for substitute teachers, and rolling out new features for school customers each month, helps us deliver a quality experience to the schools and substitute teachers that work with us.”

Lightfoot named Person of the Year

Chicago Mayor Lori Lightfoot received a professional accolade on Thursday as Person of the Year by Chicago Lawyer Magazine who praised her unbridled principles of justice and integrity as hallmarks of both her academic and professional lives, long before she became mayor, or thought of running for public office.

The accolade was given at the Chicago Daily Law Bulletin and Chicago Lawyer’s Women in Law Conference held in downtown Chicago, after the mayor gave keynote remarks.

In a published interview on the magazine’s website, Lightfoot was quoted as saying, “I really understand the necessity of total preparation,” she said, speaking to her effectiveness as an attorney. “There’s nobody who is going to outwork me, there’s not going to be an argument that I haven’t anticipated and am ready to respond to.”

That thoroughness and preparation is one that has been noted by her attorney colleagues, as well as those,now, in her political life.

She is also known for her tenacity, and integrity, in her dealings with others, and despite the bruising battle of the recent Chicago Teachers Union strike, Lightfoot managed to remain above the fray, and her reputation as a negotiator, remained mostly intact.

Victory came as she created a blueprint to dig Chicago out of an $838 million hole with a budget that passed, with only the loss of 11 votes; something that she said she was going to celebrate with a cigar and some scotch whiskey.

“She’s an incredibly smart person. She is extremely principled and she can critically think through a problem and see various sides of it,” said U.S. Magistrate Judge Susan E. Cox, who has known Lightfoot since the two were federal prosecutors in the U.S. Attorney’s Office in Chicago, noted the interview.

Translating her work as an attorney to mayor of the nation's third largest city was hard, by many standards, but in keeping with her fighting spirit, as she creates a battle plan, not only to dig the city out of the red, but also to fight long held corruption and nepotism, with many residents noting that she has true grit.

“During her time as a Mayer Brown partner, Lightfoot had a number of associates working with her, including Michael Frisch. Frisch is now senior adviser and legal counsel for the city, a job he has held since Lightfoot took office,” and he noted that “She advocates strongly for what she believes in [as mayor] and that’s the way she practices law as well,” he said in the piece.

This was patently true when she called out her mayoral candidates rivals for their ties to now disgraced alderman, Ed Burke and found herself, a relatively political outsider, as a front runner, heralded for her outside status.

Perhaps the quote from an interview this summer with Chicago Magazine captured it all when it quoted Lightfoot as saying, “I am who I am, and I am not going to change.”

Lightfoot tries to solve pension problem for Chicago

For Chicago’s new mayor, the residual bruises from the recent strike by the Chicago Teachers' Union, and the heat over the amount of money for so-called “wrap around services” such as school counselors, nurses and social workers, not to mention staff support salaries, seemed like a Herculean effort that required tact, patience, and not nearly enough money to make it all work, but it did.

That is not the only challenge that Mayor Lori Lightfoot faces, in her efforts to provide Chicago with a balanced budget; at the head of her list is help for the city’s pensions for those public servants and first responders, to fill a hole of what has grown, from being $23 billion short, under the Rahm Emanuel administration, to now $30 billion, and sent her to Springfield this Tuesday, to speak with another newly inaugurated lawmaker, Governor, J.B. Pritzker.

In a recent examination by The Chicago Tribune, in October, they said, “There are three main reasons the gap widened by nearly $7 billion. By far the biggest is that the people who run the four retirement funds changed their economic assumptions. They reduced the amount they expect to earn by investing the money already on hand, and they increased how long they expect retirees will live and collect benefits.”

For those who long for the old regime, a second look is deemed, for in their study, it was noted, “. . . Emanuel’s plan put off the largest increases in pension contributions to get the system back on track until after he left office.”

“That meant even though the city was collecting as much as $822 million a year in new taxes for pensions as employees were kicking in more, it still wasn’t enough to cover the cost of retirement benefits going out. Emanuel said raising taxes any higher at that time could have hurt the city’s economy.”

“(Chicago’s) pensions are the most poorly funded of the largest U.S. cities,” the Standard & Poor’s bond rating agency stated in a Sept. 23 report on pension funds across the nation. The annual contributions to pay off pension debt in cities like Chicago make it tougher to spend money on “priority services and infrastructure investment,” they concluded.”

Now comes the clinker, and the reason for the road trip: “She’ll have to come up with an additional $989 million a year for pensions by 2023, according to her administration’s projections. If there’s a downturn in the economy that affects pension investments, that figure could go even higher.”

In June, longtime political observer, Greg Hinz, in Crain’s Chicago Business reported that, “According to knowledgeable sources in Chicago and Springfield, after weeks of preliminary maneuvering the mayor is pitching nothing less than a state takeover of the city's cash-short pension funds, which under current law will require upward of $1 billion in new city tax hikes over the next three years to reach a path to full actuarial funding. Her proposal would consolidate city pension money with smaller downstate and suburban pension funds in a new statewide system. In some cases, those non-Chicago funds are even worse off than the city's.”

Past blame can be laid squarely on the shoulders of her predecessors, as previously noted in this column, but also by the Tribune in its own analysis, “For decades, then-Mayor Richard M. Daley and his predecessors did not contribute enough money to prevent city worker pension funds from losing ground. That allowed them to maintain city services without pushing politically unpopular tax increases — even as they further sweetened pension benefits for employees.”

Summing it up, many economists, actuaries and city hall observers note that Emanuel kicked the can down the road to his successor, who now comes begging, hat in hand, before the governor to help make her budget proposal a reality.

We noted back in 2018, again citing the Tribune, “In addition, Chicago “could find itself facing higher costs that were not included in the projected budget forecast. Those potentially include tens of millions of dollars for raises and back pay for police, firefighters and some other city workers whose unions are negotiating new contracts — as well as any costs added to the expense of running the Police Department as a result of a proposed federal consent decree aimed at restoring community trust in the long-troubled department.”

This past July, Elizabeth Bauer in Forbes quoting from the Tribune, supported Pritzker by saying that, “Illinois cannot assume the unfunded pension liabilities of Chicago and other municipalities across the state because its credit rating would be reduced to junk status if it did.”

Pritzker categorically added, “To be clear, the state is at just above junk status in its credit rating, so there are not liabilities that can be adopted by the state that would not drive us into junk status . .  “So that is not something that we can do.”

Gov. Pritzker

The Illinois State Constitution also forbids any reductions and while the Illinois Retirement Fund seems like a logical vehicle for her aims, Lightfoot is not suggesting that, but in some conservative circles there is this: “although municipal employees participate in this consolidated fund, police and firefighters do not necessarily participate in the IMRF, but have rinky-dink pension funds managed individually by their individual police or fire department, with a total of 356 police and 297 firefighter funds (as of 2016)”.

“As an indicator of how foolish this is, 43% of all public pension plans in the United States are Illinois plans.  Many of these are just as poorly funded as Chicago's funds, and the average funding level (again as of 2016) was 57.6%.  And among Pritzker's proposals is a task force to evaluate a consolidation of these pension funds, in order to provide the same efficiency of administration as the IMRF,” Bauer added.

The latest news is that a gubernatorial task force has recommended an amended version of consolidation of over 640 local police and fire pension funds, and as Hinz now reports, “partially consolidating hundreds of police and fire pension funds in suburban and downstate communities to cut costs for taxpayers, and the panel left the door open to potentially including Chicago in the same deal.”

For Lightfoot, struggling to bring city pension deficits in line, there was this disappointment:

 “Also as expected, the panel opted to exclude Chicago’s police and fire retirement system from the consolidation proposal. But it also said that though those systems get better returns than the smaller funds, the state should “continue to review the potential advantages of consolidation of these larger systems and to make recommendations to the governor on this issue.”

The timing could not be less fortuitous as Hinz noted: “That's about all that Mayor Lori Lightfoot gets out of the report, which comes less than two weeks before she's scheduled to unveil a 2020 city budget, and cover a $838 million spending gap,” making for some scrambling in City Hall.

It’s easy enough to see that, as we have noted, on more than one occasion, covering the mayor’s financial challenges, but when we take a longer look at state finances and how, in a much wider context, Chicago’s financial problems are intertwined with those of Illinois, it makes the Land of Lincoln, the land of woebegone.

Lightfoot presents proposal to reduce $838 million deficit

In a long anticipated event, Chicago Mayor Lori Lightfoot presented her budget to the City Council, as scheduled, on Wednesday, proposing a large menu of items that would reduce the $838 million deficit, to less than that, but a start of at least $350 million, and giving lawmakers as well as residents a chance to hear, and later to participate in a series of neighborhood hearings.

Mayor Lightfoot

The mayor labeled her plan "transparent, inclusive, and crafted with unprecedented input from every corner of our city.”

The elephant in the room, or rather outside of it was the noisy demonstrations of the Chicago Teachers Union who planned a large presentation that added even more to the increasingly circus like atmosphere, of the teachers strike, with the mayor’s firm assertion that there was no money to pay for every school to have a nurse, librarian and social worker, a fact underscored by what amounts to every measure, and step anticipated from saving money on revenue collection process to taxing single ride shares and a controversial move to issue bonds, that has some local observers worried.

What most don’t want, including Lightfoot, is to have a repeat of property taxes, passed by her predecessor, Rahm Emanuel, the highest in city history. As she noted in her concluding remarks, where once more she mentioned needing help from the state capital, specifically, Gov. J.B. Pritzker, who had already demurred, in an earlier conversation about how much he might, or might not give, and her then reaction, some might say veiled threat that Chicagoans might not support his graduated income tax proposal, up for a referendum this fall.

"If we don’t get the authorization we need, we will be forced to make more painful choices when it comes to new sources of revenue," Lightfoot said.

"And we all know what those choices are," Lightfoot said, alluding to a possible increase, she has heard "time and again" that residents do not want. "But I have full confidence that we will be able to work with our partners in the state capital to keep that from happening."

The bond rating agency, “S&P said in a statement that “outside of a massive property tax increase, it has limited options to raise significant predictable revenues through a single tax or fee increase without state legislation that would expand the city’s revenue-raising authority.”

The new mayor has not shied away from the realities of a city whose history of financial missteps, including pension holidays, where no payments were made to the fund, or selling the family farm, as Mayor Richard M. Daley did, with the now infamous parking deal that marred his legacy, with billions lost to JP Morgan in a parking deal that also cost him support, from even stalwart Daley fans.

In that vein, It has also been reported that “she will hike parking meter rates as part of the 2020 budget, in a move that she said will allow the city to keep additional revenue rather than make higher payments to the company that leased the parking meters.”

"I am here to tell you that we didn’t solve our $838 million budget gap with a large property tax increase in 2020," Lightfoot insisted. "Instead, our budget gap was closed through a combination of savings and efficiencies totaling $538 million, along with a number of carefully chosen revenue sources totaling $352 million."

Using what she called "zero-based budgeting," or building the budget "from the ground up," Lightfoot said her administration identified $150 million in savings and efficiencies, reported local NBC affiliate, NBC Chcicago.com.

One proposal to save $200 million is a refinancing of debt, an outstanding $1.3 billion dollars, a move that her administration has been at pains to say is not the “scoop and toss” maneuvers of her predecessor, Emanuel that cause all sorts of headaches for the city balance sheet.

In advance, of Wednesday, the Chicago Tribune, on Tuesday also noted that, “Until recently, Lightfoot’s team wouldn’t rule out issuing pension obligation bonds as part of this year’s budget

Simply put, the “maneuver . . .  involves selling new long-term debt to raise funds to pay off maturing bonds, effectively extending the timetable for retiring municipal borrowings. Refinancing that aim to reduce interest rates typically keep the same maturity schedule,” noted the Wall Street Journal late last year, as the popularity increased for “cash strapped governments.”

The Wall Street Journal, last December, defined them: “Under a POB, the city issues bonds at relatively low interest rates and uses the money to reduce its billions in pension debt. The pension funds would invest the bond proceeds and ideally earn returns that outpace the interest the city would have to pay on the bond debt”, but experts say it’s a risky venture. 

“For example, pension bonds in Puerto Rico, Detroit and Stockton, California, contributed to their bankruptcies, prompting some fiscal analysts watching Chicago’s moves to urge caution," added the Journal.

While administration officials say that this is part of a long term strategy that might yield results, and is not dependent on POB’s per se, but, others we have spoken to have said, “don’t do it.

Consistent with her quest for special capital, she is looking for “a minority underwriter representation to be over 50 percent on the debt restructuring.”

“All the existing bonds that are being refinanced are due in 2040 and the new bond deal also would be due in 2040. . . Lightfoot would use all of the savings over the life of the refinancing deal upfront, opening the door for criticism from observers and analysts who think the savings shouldn’t be spent as a one-time fix.” added the Tribune.

Hard nosed realists, and macro economists, that have restored debt for other cities and tackled structural deficits have not, and cannot rule out increased taxes and in this regard, Lightfoot is not alone, even as she has scoured every inch of City Hall and city-wide departments for ways to cut expenses.

One of them, is to triple tax solo ride-share programs as Uber and Lyft, going in and out of downtown, a move expected to bring in $40 million and to relieve congestion.

“Rideshare trips in Chicago currently are assessed a flat $0.72 per ride. Under the new proposal, those fees would drop to $0.65 for pool rides, but increase to $1.25 for single riders. Users traveling to and from downtown, however, would pay a whopping $3 in taxes and fees. The downtown surcharge would apply on all weekday rides from 6 a.m. to 10 p.m.,” according to ABC7Chicago.com.

Uber Chicago spokesperson Kelley Quinn said in a statement, "The Mayor's proposal amounts to by far the highest ride sharing fee in the country and will take money out of the pockets of riders, who rely on apps to get around, and of drivers -- half of whom live in the South and West sides of the city."

In one of those politically incestuous relationships that characterize Chicago, Quinn held two posts in the Emanuel administration, notably as his chief spokesman. 

Rahm Emanuel

Perhaps as a consequence, Quinn added a jab at Lightfoot: “As a candidate, the mayor said she was committed to equity, yet she is proposing to hike taxes by nearly 80% on undeserved communities who do not contribute to congestion and lack reliable access to transportation.”

The record, in fact, shows that Emanuel did very little for public transportation, much like his predecessors; as City Lab transportation writers noted, as far back as 2018:

“Emanuel abandoned good ideas, like turning the city’s most popular bus line into bus rapid transit, despite it being constantly held up in traffic. And he was distracted by shiny objects designed primarily to serve the wealthiest few, like the aforementioned tunnel to O’Hare, despite an existing rapid rail service. Neither Daley nor Emanuel invested in a significantly expanded transit system (though both admirably identified funding for reconstruction of many rail lines).”

They mayor’s response? “I reject – and you should be deeply skeptical – of the false narrative ride-share companies are spreading” and, “The multi-millionaire owners of those companies have had essentially free reign in Chicago.

Thanks, in no small part, to one of Emanuel’s brothers, Ari, who had a stake in Uber.  and who has subsequently made a considerable amount of cash, Quinn’s statement of concern seems disingenuous.

“Lightfoot also will propose a tax hike on all food and drinks sold in Chicago restaurants. The proposal would double the current 0.25% tax on food and drinks sold at retail establishments and restaurants, the mayor’s office said. Aldermen will need to approve the increase, which would kick in Jan. 1,” again from the Tribune in advance of Wednesday’s presentation.

The mayor said this is a “modest increase that’s certainly fair” because Chicago’s restaurant tax is lower than “some of our suburban areas.”

Undoubtedly, this will not endear her to restaurant owners, including some on the City Council, such as Tom Tunney, owner of the proverbial old-school “Ann Sather” restaurants, serving their popular sticky buns and other comfort food stalwarts that Chicagoans have loved, but perhaps a little less so, if passed.

Approval is needed from the City Council on Nov. 26 and there will be some serious horse trading as many are seeing this as an opportunity to ensure that Lightfoot knows that her political honeymoon is over.

Game on! CTU strikes after refusing CPS offer

Dr. Jackson of CPS

The day has come, and the Chicago Teachers' Union announced that it could not accept the offer from Chicago Public Schools and Mayor Lori Lightfoot, and that the strike would begin as planned on Thursday, giving no solace to the mayor and School District Supervisor Janice Jackson, in what can only be called the very last thing wanted, this early into the former’s term in office, just over 140 days.

In anticipation of the strike, CPS and the mayor’s office announced that classes would be cancelled the day for the strike --- a move designed to help parents in child care, and to lessen the optics that the national media would pounce on in the nation’s third largest school system with over 300,000 students, and 24,000 teachers.

As in 2012, playing to school of public opinion, has mostly been in the union’s favor, with supporters expressing their engagement, before Thursday, and in a neat trick, Lightfoot has come out of this battle with her reputation largely intact, with only 12 percent blaming Lightfoot in a recent Chicago Sun Times/ABC Channel 7 poll.

This is in direct contrast with the last strike in 2012, where former Mayor Rahm Emanuel, who became the villain, in what was a teachers v. him battle where he wanted them to work longer hours without additional compensation.

Not all is fair in love and war, as the old adage states, and there were throngs of school teachers and staff, wearing red shirts near their schools, with signs that read, “Our Strike/Your Watch” - addressed directly to Lightfoot.

Ms. Weingarten

This is clearly a power play between a long underappreciated workforce, and a city divided by race and social class, where the differences are seen most starkly in education, right behind housing; and, unfortunately Lightfoot, being new, is the perfect scapegoat, in the war of words.

“We’re going to teach the new mayor a lesson,” says American Federation of Teachers president Randi Weingarten adding fuel to the fire.

Since Chicago got “home rule” to govern its education, during the administration of Richard J. Daley, those lines became hardened, and despite the more liberal policies of his successors, and son, Richard M. Daley, prying loose the vice of discrimination became even more difficult in an education district that is mostly black and brown, and mostly, recently, funded solely by a real estate tax; so, it does not take a genius to figure out who was on the losing side, for so long.

Enter Lightfoot with her mandate of change, and who was not the favored candidate, the plot thickens, with the defeated candidate, Cook County Board President Toni Preckwinkle, still in power, in that office, and also the local head of the Democratic National Committee, and in a blue city, and in a blue state, that counts for a lot; and, it was no surprise to see the near tear--stained face of Preckwinkle during her concession speech. 

Recently she announced that had she been elected mayor, there would be no strike; which might have been true, but as one person later said, "She would have given a blank check to the CTU and bankrupted the city, and then we'd be like Detroit."

While the CTU has vigorously denied that their endorsement of Preckwinkle, and not Lightfoot, had anything to do with the increased, and loud demands, for written promises for more social workers, nurses, and libraries in a city mired in red ink, (to the tune of $838 million), and a pension crisis of  $28 billion, those numbers cannot be ignored, say its critics.

As we said before, “Adding to the ire between the two was a commissioned poll, from March, that showed a victory for Lightfoot, “to finish first among 14 candidates vying to replace” Emanuel, which CTU Vice President Stacy Davis Gates called “trash.”

“Sharp rhetoric is not unknown in Chicago politics, but this time, on the backdrop of a weakened city finances, with the historic election of a black woman, in a city with nearly a 35 percent black majority, adds another dimension to an already burdened financial future.”

Putting Lightfoot on the ropes, nationally, and to embarrass her, seems to be more important, say some than finding a middle ground, or even, going back to work while negotiating, but this seems to have been never considered, and as Lightfoot has often said, they were bound and determined to strike, in what seems more and more to the mayor's supporters, as a take-down of her, as Weingarten noted.

In the recent past, the Chicago Sun-Times and The Chicago Tribune urged the union to take the offer of a 16 percent pay raise, over 5 years, to no avail, bringing this stalemate, which teachers said that they hoped to be short, but is apparent, now that the union is prepared to keep it ongoing, and has sent key negotiators, from the 40 member team back to the picket line, as the news cameras roll.

CTU has also been somewhat disingenuous claiming, in a press release, that “CPS gets upwards of $1 billion additional dollars a year from the state of Illinois to lower class sizes, which are among the largest in the state; support students in poverty . . . and address CPS’ demonstrated need for wrap-around supports for students who confront trauma and violence. Yet CPS and the mayor have refused to commit to investing that billion dollars in real equity on the ground for school communities.”

“But, in fact, CTU’s own filings with the independent fact finder in the labor dispute  indicate that most of that $1 billion went to CTU members' pensions,” says Crain’s Chicago Business columnist Greg Hinz, who said that nearly three-quarters of that went to teachers’ pension plans, unmasking Lightfoot as the villain, they want her to be.

“Yes, according to CTU’s own filings, $380 million from a property tax increase and $211 million from the state went specifically to shore up the fiscally weak Chicago Teachers Pension Fund. And revenue from the property tax hike is expected to bring in almost an additional $100 million a year on top of the $380 million,” he continued.

While the mayor has said that she is “disappointed” - how to clear the decks without the money remains a conundrum for many city hall watchers. Of course, the mayor could as columnist John Kass suggested, slash her salary and compensation offer, and provide the money for the so-called wrap around services, but that Machiavellian move could cost her good will in any later negotiations; but it’s not entirely a pipe dream, say others.

Mayor Lightfoot

"From a financial standpoint, we always have to keep in mind the taxpayers. CPS is just on the other side of pretty significant crisis and we don't have unlimited resources, but having said that, we put very generous offers on the table both for teachers and support personnel and I'm hopeful that we'll be able to bring them back to the table and resolve all the other open issues."

The 1995 law that says that teachers can only strike on wages and compensation is a major sticking point, and maybe, Lightfoot will have to go Gov. J.B. Pritzker hat in hand, for another change, and an IOU?

“There’s a finite amount of money that’s available,” she said. “As you know, we’re barely two years away from a moment when CPS was on the verge of insolvency. There’s not an unlimited pool of money, and I wanted to make sure that we made that point very clear.”

The rhetoric has gone back and forth with Sharkey, being the loudest, saying, according to the local CBS station, "Criticized the city’s offer of $1 million over the life of the contract to reduce class sizes in grades 4-12, and $2 million over the life of the contract to recruit and train new nurses, social workers, and case managers. He said that would be only enough money for two teachers and four nurses, social workers, or case managers per year for all of CPS."

The visit of presidential candidate Elizabeth Warren has also given CTU more national attention, and while Warren did not attack Lightfoot, the implication that support was needed, or else, has contributed to the circus like atmosphere, surrounding the strike.

“I’m here because the eyes of this nation are upon you. They have turned to Chicago for you to lead the way. For you to show how the power of standing together is the power of making real change in this country,” Warren said.

She also gave her final benediction to the union's position, when she said: “Everyone in America should support you in this strike ... you don’t just fight for yourselves, you fight for the children of this city and the children of this country."

.Updated, 22 October, 2019, at 5:35 p.m. CSDT