City Club Panel on CPS Bankruptcy

On Tuesday, August 25th I had the good fortune of speaking on a panel with the city’s foremost players in school and municipal finance. I was grateful to the City Club for reaching out to include a voice on the panel with on-the-ground experience in our schools. I did my best to represent the voices of educators.  I hope that–with the limited time I had–I adequately represented those voices.  My statement begins at the 23:10 mark. Click the image below to see the video.  Please forward, share, and leave a comment below if you wish. 

The specific time segment of each panelist is as follows:
01:30 George Panagakis
10:45 Jesse Ruiz
17:40 Chuck Burbridge
23:10 Troy LaRaviere
30:50 Paul Vallas

Email: [email protected]
Twitter: @troylaraviere

Ernst and Young Structural Deficit Analysis for CPS (Draft)  See page 12 & 23 for information cited in the speech


I recommend watching the last few minutes of Paul Vallas’ presentation in which he lays out the basic rules CPS operated by before the financial crisis. This part of his talk begins at the 36:00 time segment. I think all of Chuck Burbridge’s presentation is worth listening to, and that George Panagakis’ presentation on the intricacies of bankruptcy was eye-opening. This panel represents the first time I’ve prepared all of my remarks beforehand, so I’ve included those remarks below.  I learned a lot from my participation on the panel and I hope you learn from it as well.

Prepared Remarks

Thank you to the City Club for inviting me to this panel and luncheon. Unfortunately I could not take advantage of the lunch as I am fasting today in solidarity with the 12 parents and community members who are in their 9th Day of a Hunger Strike to save Dyett School as the only open enrollment neighborhood high school left in their community (I mistakenly said “city” in my remarks). This gesture on my part is relatively insignificant when compared to the sacrifice they are making on behalf of their children.  But I make it nonetheless before I begin my remarks.

As residents and taxpayers we have to do more than identify problems. We have to identify and understand the source of those problems. If we don’t neutralize that source then we might be able to solve this problem today but that source will rear its head a few years down the line to re-create the same havoc that it’s wreaking on us today.

We’re being told that pensions are the problem. We have a problem with pensions but pension are not the source of our problem. This administration consistently misappropriated pension funds, and then attempts to convince us that pensions themselves are the problem. That’s like a thief stealing your rent money and then attempting to convince you that the landlord is the problem.

The source of our problem is city and school officials who spend and borrow money in a manner that is reckless and corrupt; the parasitic private sector banks and investors who are always looking for creative ways to rip off taxpayers, and the state legislators who enabled this irresponsible fiscal behavior in the first place.

For the sake of time, I’m going to focus my comments on this administration’s reckless borrowing and the bank that benefit from it.  When the Tribune attempted to look into the cost of this borrowing their reporters and attorneys were forced by CPS to spend a year getting the details about how much it spends in interest on its massive debts. So not only are they putting us in debt but they tried to prevent us from finding out just how much debt they put us in.

Interestingly enough, CPS recently hired Ernst and Young to do an analysis of their structural deficit. That analysis shows that pension costs are projected to rise only 32% over seven years, while debt service is projected to rise 350% from $119 million to $421 million.  THIS is the debt that’s driving up costs. This debt is not owed to teachers. This debt is owed to financial institutions like the Pritzker Group, Goldman Sachs and Northern trust—all Emanuel Campaign contributors; and his administration wants to ensure they get paid what they’re owed.

This debt is also owed to banks and investors who virtually swindled CPS out of $100 million. Financial institutions like Bank of America and the Royal Bank of Canada. They have documented evidence that these banks knew that the auction rate securities market was about to collapse while they were preparing to underwrite a massive auction rate bond issue for CPS.

That’s illegal. You can sue them and get those millions back. But the Emmanuel administration refuses. They want them to get what’s owed to them even though they got it in through corrupt and deceptive practices.

This administration wants to pay your tax dollars to EVERYONE they owe, except one group.  The only people the Emanuel administration doesn’t want to pay what they’re owed are teachers.

Let me say it again another way.

The only group of people the Emanuel administration doesn’t want to pay, just happen to be the only group of people who actually worked for what CPS owes them–spent their entire careers working and sacrificing for what CPS owes them.

PNC Bank didn’t sacrifice a more lucrative career to dedicate itself to teaching science and mathematics. Chicago’s teachers do that.

Goldman Sachs didn’t sacrifice time with their own families to stay after school to tutor struggling readers. Chicago teachers do that.

None of these institutions spent consecutive years of his career working with four struggling students in hopes that that sacrifice and investment of time would pay off on their graduation day …. only to have those hopes destroyed when the news reaches you that you’ll be preparing instead for their funerals—in part, as a result of the neglect of their communities by many of the same people responsible for the neglect of their schools.  Their names:  Miguel. Tyray. Roberto. Candace. Those are the names I carry with me, but teachers all across Chicago have names of their own etched in their memories forever.

As our teachers feel this district coming in to take what little they do get in return for their sacrifice, this administration’s hollow, empty, and hypocritical use of the term “shared sacrifice” to justify this encroachment must seem profoundly disrespectful and painfully ironic.

To reiterate. The source of our problem is (1) city and school officials who spend and borrow money in a manner that is reckless and corrupt; (2) the parasitic private sector banks and investors who are always looking for creative ways to rip off taxpayers, and (3) the state legislators who are all too eager to create a legislative environment in which this legalized theft can occur.

If anyone is made to sacrifice, it has to be members of these three groups, because the behavior of teachers did not cause this problem.  The behavior of these three groups caused this problem. Teachers have already made their sacrifice a thousand times over, and those whose behavior caused this crisis have no right to ask them for more.

13 thoughts on “City Club Panel on CPS Bankruptcy

  1. Wow I am SO impressed with your speech! Although I’m not a teacher or even a union employee, I am pro union and I’m also pro teacher – I’ve seen teachers get dragged through the mud over their comparatively meager benefits and salaries since I was a little girl in the 1970s. I say enough is enough! Place the blame where it belongs. Thank you for standing your ground and standing up for Chicago’s hard-working teachers. I truly hope you’ll run for mayor! I think you’d be a great one. Lisa Gee

    Liked by 1 person

  2. Astounding that Claypool and the board make a demonstratively false statement in the warning resolution: “Failure to meet the 95% threshold puts schools and CPS at risk of financial sanctions.” Neither Illinois law nor Illinois regulations make any reference whatsoever to a 95% testing threshold, let alone link financial sanctions to it. And federal law makes no such linkage either. More than a Score has repeatedly asked state and district administrators making this claim to cite the relevant statute and regulation; none have been able to because it does not exist.

    Liked by 1 person

  3. It’s always a joy to hear your straightforward input and how it cuts through the media spin from City Hall. You, Karen and Chuy are the best chance this city has of wrestling power from the wealthy, corporate interests and their cronies that serve them.

    Liked by 1 person

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