2017 Chicago Public School budget offers more hope than reality

Forrest Claypool

On Wednesday the Chicago Board of Education in a 6-0 vote agreed to pass a $5.4 billion public schools budget for 2017, that, at its core, relies on aid from the Illinois State legislature, to the tune of $215 million, dependent on lawmakers agreeing to pension reform; more accrued borrowing at $945 million, and still another increase in property taxes.

As previously proposed, a 7 percent payment for teachers, that had long been paid for them, by the city, in a negotiated agreement for the last 20 years, is also part of the cuts, incorporated. The latter, for months, a matter of contention between the Chicago Teachers Union, and the Board, had the endorsement of Mayor Rahm Emanuel, who said, "I want the teachers to be part of the solution, there's a pay raise in there for them," Mayor Emanuel said. "There are changes to also make sure they get a pension. It's their pension, they individually retire on it."

This comes just on the heels of 1,000 teachers who have been laid off, in what the CBE has called a cyclical maneuver, and cuts to arts education, and a reconfiguration of how special education students are helped.

In the truest sense, the budget is not balanced, yet, The Rev. Michael Garanzini, formerly president of Loyola University, and now board member, claimed, perhaps with more hope than accuracy,  "It's so close. It's just balanced, if all these things come true," Garanzini said of the budget. "But we have to start this way, otherwise we would be responsible for cuts, in anticipation of money that may not or may come. We don't want to budget that way either, so we're budgeting I think about as wisely as you possibly can given the fiscal climate and the fiscal challenges that we face."

Those dependencies in fact are what gave Laurence Msall, president of the Civic Federation, (a watchdog organization) a stinging rebuke both of the process, as well as the content. He said, in a telephone interview with the Chicago Sun-Times, “This is a very expensive budget, at the mercy of the CTU on the concessions, at the mercy of the Legislature on what pension reform would look like and what the governor would accept — and then they still need everything to break right.”

Adding to the mix are some questionable line items, such as $17.3 million for new annexes and classrooms in a district whose lowered enrollment is forcing some schools to consolidate with others. But, most lacking, according to Msall, is plan for capital expenditures, they note: “The Civic Federation recommends that the District provide a plan detailing how it will balance revenues with expenditures in the event that revenue and/or labor contract savings are not realized in FY 2017 and that it continue to work with the State to secure equitable funding”.

The Emanuel administration, so far, has long been keen on tax increases to balance its budget, and pay for the budgetary sins of the past. Last year property taxes were increased to pay for the police and fire pension obligations, and then, prior to that year, there was a telephone tax on landline and cell phones to pay for laborer pensions. Then just last week he again proposed to increase water and sewage taxes to pay for municipal worker pensions. And, now, to the highest extent by the law, another property increase to help shore up the school budget --- projected to bring in $250 million.

Of the greatest concern, by most financial officials and advisors,  is the increased indebtedness that the budget contains especially, the increased cost of borrowing, and other expenditures that are not balanced by revenue. According to the Chicago Tribune, “CPS is borrowing too heavily, at an estimated $35 million cost for $1.5 billion in short-term loans to replenish the district’s cash flow until March, when property tax revenue arrives.” A move that sustains the old adage, “Robbing Peter to pay Paul.”

If CBE is looking to obtain $945 million in borrowing for capital projects,  without any long-term capital improvement plan, then the budget becomes self-defeating by accounting standards. But, spokesperson Emily Bittner insisted still that “CPS’ revenues match expenditures, and expenditures are down $232 million from FY16.”

If these seem like delusional statements, to some, then the reality of certain cuts, and changes in spending become especially problematic, for special education students, where the change in assessment to allocated funds, for “special ed” teachers, in the form of a block grant, to principals makes the future unpredictable, as well as consequential.

The money that principals will now receive is based on what the school spent last year, “a problem because many schools couldn’t make hires until after the start of the year. Schools also lost a flat 4 percent off their total money for children with disabilities, a pot of money that’s still up for grabs by schools that succeed in appealing,” said the Sun-Times.

“It’s putting the principals into a really terrible spot. They’re having to make decisions weighing general education against special education in some cases,” claims education policy analyst Rod Estvan, and in some cases, using general instruction dollars to fund legally required special education services, he added.

With a labyrinth of proposals, taxes, cuts and formula changes, the prayers of Fr. Graziani, notwithstanding, the CPS budget is a fragile one, built mostly on hope. And with the increased cost of borrowing (since the District's credit rating has been reduced to junk status), and its emergency reserves at a deficit of $160 million, plus a withdrawal of $20 million to pay down debts and interests, and an additional $37.3 million in borrowed funds to pay more, it’s hard to see Chicago School Board President Frank Clark’s assertion that the new budget is “extraordinary” and that “progress has been made.”

Even more worrisome is that there is no “Plan B” if the money does not come from Springfield, a definite uncertainty considering the political donnybrook between Republican Gov. Bruce Rauner and the Democratic majority, and the former’s desire to place term limits that would eliminate the thorns in his side, in the persons of Speaker of the House Michael Madigan, and Senate Majority leader, John Cullerton.

If the new taxes do not provide enough for tension relief, then what are the options? This seems to be a question that no one has answered.

With what many are calling a phantom budget, that is reliant on “what ifs” and
“maybes” including political currents that even Rauner can’t comment on without stumbling, the danger to Chicago public school students remains. But, looming in the background, as we wrote last week, is the specter of another teachers strike, and in fact, Karen Lewis, president of the CTU has said, that while school will open on time, it is highly likely that a vote to approve a strike could occur as early as mid September, once teachers receive their first paychecks.