Many, many stories regarding Chicago Public Schools and its finances broke today. We roll out the details below. But much of it circles back to Gov. Bruce Rauner’sTurnaround Agenda. Let me paint a picture:
Chicago Public Schools, in a financial wreck, doesn’t have authority to further raise taxes without Springfield approval, even though CPS and CTU both agree on the need for a dedicated property tax for teacher pensions. So, it turns to the bond market to get through the school year.
Gov. Bruce Rauner, days before the bond offering, says he’s interested in a state turnaround of CPS and would authorize its bankruptcy.
Bond investors, who normally ignore the minor details, certainly notice a headline about CPS going bankrupt, get spooked, and shun CPS bonds.
Meanwhile, Mayor Rahm Emanuel stonewalls on the idea of sending “surplus” Tax Increment Financing (TIF) money to CPS. Because if he commits any amount of TIF funds, it’s a slippery slope to all TIF funds going to schools.
The Chicago Teachers Union, which hates TIF money because it creates a shadow budget purely under the mayor’s control, demands use of those surplus funds right now, to demonstrate that the city is serious about supporting schools.
Emanuel and CPS CEO Forrest Claypool continue to stonewall on TIFs, because of #4.
CTU decides Emanuel et al can’t be trusted because of #5, reject contract offer.
Rauner, seeing opportunity to turn up heat and bring everyone to the table in Springfield, appears before microphones to talk about his CPS takeover plans, the day before CPS bonds go to market.
CPS bonds go to market and… That’s what we’ll find out today.
Now that CTU has rejected a deal that would save CPS money, and if CPS bonds fail again, Rauner will essentially force CPS and all of Chicago to the negotiating table in Springfield. Although CPS can borrow short-term debt from banks for a few months, the interest cost will be crushing and require even more cuts–likely teachers. The negotiating table in Springfield would most certainly include Rauner’s Turnaround Agenda. Specifically his plan to eliminate government employee collective bargaining, which includes CPS.
It’s all connected: CPS’ ability to manage its finances will likely have a long-term direct impact on the City of Chicago through either a property tax increase or other revenue impacts.