An Absurd Proposal
Last week, I listened to reports of a State attempt to takeover Chicago Public Schools (CPS) and pave the way for bankruptcy proceedings, the way one might listen to a report of UFOs spotted over Lake Michigan. “Is this a joke?” I thought to myself.
While the Board of Education and Chicago’s Mayor have been reckless in their management of Chicago’s schools, the State has proven itself to be far more inept. Let’s not forget that it was the state that thought it would be a good idea to give control to the mayor in the first place. It is the state whose teacher pension system is in worse shape than the Chicago pension system. It is the state that can’t pass its own budget, and it is the state that passed the legislation enabling CPS to engage in the risky borrowing practices that lost the district over $100 million. Suggesting the state manage the affairs of Chicago Public Schools makes about as much sense as recommending a cocaine addict handle the affairs of an alcoholic.
A Failed Strategy
Governor Rauner–who backs the state takeover proposal–represents many of the same privatization interests as the mayor. Emanuel’s privatization-friendly school policies have depressed student achievement, widened the academic achievement gap and redirected tax dollars intended for schools to private for-profit interests. From his reckless borrowing, to his wasteful spending on poor performing for-profit charter and alternative schools, this mayor has shown his cards repeatedly. His policies demonstrate a concern for the profit margins of his campaign donors in the finance industry–at the expense of the academic achievement of our most vulnerable students. Governor Rauner’s thirst for toxic privatization schemes is even greater than Emanuel’s. Any arrangement that gives him influence on the city’s school system will ensure its demise and do significant harm to the education and development of hundreds of thousands of Chicago children. One need only look to our north at the cities of Flint and Detroit to see concrete examples of the failure of Republican state control of school districts and other municipal units of government.
Bankruptcy: A Bluff
In terms of the bankruptcy component of the proposed legislation, it is clearly a bluff intended to intimidate the teachers union into accepting diminished compensation for their work. The problem bankruptcy presents to the governor–and the reason I’m certain he’s bluffing–is that a CPS bankruptcy poses a greater threat to his allies in the banking and investment sector than it does for the teacher’s union. For years these moneyed allies have preyed upon Emanuel’s reckless fiscal management of CPS and invested heavily in CPS debt. Indeed, while pension costs are projected to rise only 32% over the next seven years, debt service is projected to rise 350% over that same period. As a result, taxpayers will be forced to pay these investors the kind of high interest that will ensure a handsome profit. Bankruptcy would protect taxpayers from these parasitic financial arrangements by forcing those investors to accept far less than they planned on.
Shared Sacrifice: An Empty and Hypocritical Call
Neither Emanuel nor Rauner would put these investors in a position to make such a sacrifice. When they speak of “shared sacrifice” they tightly contain that sacrifice among teachers and working class taxpayers–not the moneyed interests they represent. The primary group of people City Hall and Springfield are asking to sacrifice just happen to be the people who spent their entire careers working for what CPS owes them. Their sole objective appears to be to force CPS to renege on its legitimate debt to teachers, while both Rauner and Rahm refuse to put forth a single substantive plan to recoup CPS’ illegitimate losses to banks and investors.
Rahm and Rauner’s single-minded attack on CPS’s debt to its teachers should make Chicago residents wonder if this whole “CPS Takeover” stunt was jointly choreographed by operatives in the governor’s mansion and those on the fifth floor of City Hall.
Addressing the Problem
Last week’s stunt from Springfield is yet another distraction from the real problems our district faces, and the solutions that would address them. The universally understood cause of CPS’ problems is the failure of the Mayor’s Office (both Daley and Emanuel) to manage our district’s finances responsibly. Their mismanagement highlights the need for several things:
Competent and Invested Policy Makers
First it highlights the need for a school board in Chicago that is both representative and competent. It is my professional belief that such a school board should be composed of a variety of public school stakeholders, including parents, educators, community members, business people, and experts in education fields such as cognitive psychology, school leadership, curriculum, instruction, and school finance.
Disciplined Fiscal Controls
Once a competent governing body is in place they must develop a long-term financial plan that restricts the district’s ability to make reckless fiscal decisions. Former CPS CEO, Paul Vallas, was the last schools chief to have a structurally balanced budget (with a $1.2 billion cash reserve and a fully funded pension system). In August, Vallas returned to Chicago and outlined the controls that kept CPS budgets balanced during his tenure. They included the following:
- Engage in long term (five-year) budget planning.
- Never borrow for operational expenses.
- Never add additional programs and other expenses without additional revenue to pay for them.
- Never open new schools when there is declining enrollment. The decision to spend millions building new schools should be based on demographics, not school reform ideology.
- Never redirect funding for pension payments toward other spending projects (like building new schools in a district that has less students).
- Click here to view Vallas’ full comments (above list starts at minute 36:10)
In addition to these fiscal controls the state must repeal legislation that allowed CPS officials to hide budget deficits and lose more than $100 million to parasitic Wall Street investors.
Aggressive Efforts to Recoup Losses to Banks
A more responsible mayor and school board could launch an all-out effort to recoup more than $1 billion from banks and investors. These banks engaged in illegal behavior to get CPS officials to invest tax dollars in failed financial swap deals and dubious auction rate securities. If the mayor can spend four years aggressively attempting to defy the Illinois Constitution by defaulting on legitimate pension debt it owes to public workers, a more responsible school board can certainly be just as aggressive in its attempts to contest the illegitimate debt claims of banks and parasitic investors.
The Bottom Line
Neither the disciplined fiscal controls or the aggressive recoupment efforts I am recommending will happen without competent and invested policy makers; a critical mass of whom cannot be found in either Springfield, City Hall, or the Board of Education as it is currently composed. A more competent and representative board could move forward with these common sense approaches to addressing the challenges our school district is faced with. Such a school board is needed because the Mayor’s Office has failed our schools, and the State is both ill-prepared and ill-motivated.