Saving CPS from CPS: Real Shared Sacrifice

During my career as a Chicago Public School principal, I have often been at odds with the Chicago Teachers Union. I have been the target of multiple grievances filed by CTU against me when I have disciplined or dismissed a teacher. All were signed by Karen Lewis, and I fought most of them vigorously. Given that history, you might think it odd that I support several CTU stances.  However, I believe in a simple truth: When you’re wrong, you’re wrong; and when you’re right, you’re right. Unfortunately, our mayor and his appointed board of education have been so irresponsible and so reckless, that I find myself squarely in agreement with the CTU on several school issues.

When they’re right, they’re right.

Furthermore, during the latest contract negotiations, I have come to the conclusion that CTU’s refusal to accept the Board’s last contract offer gives the residents of Chicago the best chance we have to fix the causes of CPS’ financial crises. Once the contract is signed, the district will be free to continue the reckless spending and borrowing that brought us to this crisis. The continuation of the negotiations gives the CTU an opportunity to clearly and repeatedly articulate the real causes of CPS’ financial problems to Chicagoans, and to challenge us to hold our officials accountable and ensure they do not repeat their failures.

Those failures were described by Paul Vallas.  I’m not an admirer of his education policy, but Vallas was the last Chicago Public Schools CEO to leave the district with a structurally balanced long-term budget. He also left CPS with a fully funded pension system, and over $1 billion in reserves.  When Vallas returned to Chicago this past August, I was fortunate enough to have an hour-long conversation with him a few days before we both participated in a panel at the City Club of Chicago. During our conversation—and during the panel—Vallas outlined the financial rules that kept CPS budgets balanced during his tenure.  Those practices included the following:

  • He did not add programs without identifying additional revenue to pay for them.
  • He did not borrow for operational expenses.
  • He did not spend on new schools when there was declining enrollment. Building new schools should be based on demographics, not school reform ideology.
  • He did not redirect funding for pension payments toward other spending projects.

After Vallas’ departure, the mayor’s appointees to CPS lost all fiscal discipline and consistently violated every one of these sound budgeting practices. As a result of their mismanagement, CPS now claims they need “shared sacrifice” from teachers.  Teachers union officials don’t seem to have the kind of consistent and concise messaging the Mayor’s office has, so the average news consumer may not notice that within CTU’s response are the keys to solving CPS’ fiscal crisis.  I will take the liberty of fine-tuning CTU’s message and speaking as the Chicago public school teacher and union member I once was, before becoming an administrator nearly a decade ago.

*  *  *  *

The board asks us for shared sacrifice. This is our response to that ask:

First: The taxpayers of Chicago must know we have sacrificed.  CPS effectively cut teacher salaries for four years in a row when we allowed them to default on pay raises that were in the CTU contract.  If costs go up, and the teacher salary scale stays the same, then overall teacher pay has effectively gone down.  Teachers accepted that pay freeze and they saved the district more than half a billion dollars by making that sacrifice.

Second: Not only have we made sacrifices in the past, but we completely agree with the district’s call for more shared sacrifice.  The key is that it must be shared—shared with the parties responsible for this fiscal crisis. For example, CPS was knowingly and illegally lured into loan agreements that cost them hundreds of millions in fees, penalties and interest.  Teachers did not do this.

We will accept the mayor’s call for us to sacrifice when he calls for Bank of America to sacrifice.

We will accept his call for teachers to sacrifice, when he calls for the Royal Bank of Canada to sacrifice.

Mayor Emanuel could sue these institutions to get taxpayers’ money back.  Thus far, he has refused.  These are just two examples.  There are others. The larger point is that Emanuel’s call for hard working teachers to endure more sacrifice cannot be respected or taken seriously until he forces those who caused and profited from this fiscal crises to sacrifice as well.  In short, we will accept shared sacrifice, when it’s actually shared.

Third, and finally: We would be happy to sign a contract with CPS that ensures we will not end up in this same crisis in the future.  Accordingly, the contract must include provisions that force CPS officials to exercise discipline with taxpayer money; provisions that emphasize intelligent new school construction policies, revenue generation, sound borrowing practices, responsible payment of legitimate debts, and recoupment efforts for illegitimate losses.  Part of the solution will involve raising additional revenue, but we cannot allow them to raise taxes without eliminating their ability to waste those tax dollars.

In summary, (1) Past teacher sacrifices have already saved the district more than half a billion dollars, (2) We are willing to engage in additional shared sacrifice, so long as it is shared, and (3) We will protect students and taxpayers by using these negotiations to ensure future fiscal discipline by officials in CPS and City Hall.

That is what we–the teachers of Chicago–are standing for, and we are asking all Chicagoans to stand with us.

*   *   *   *

For too long we have allowed CPS and City Hall officials to distract our attention away from their incompetent management of CPS finances. They channel public anger toward our children’s teachers when our attention should be focused squarely on those whose recklessness created this crisis: CPS & City Hall officials, along with their allies in the banking and finance industry. We must support our teachers in their call for true shared sacrifice and sound financial practices by our elected and appointed officials, and we must acknowledge the sacrifices these teachers have already made. Please join our teachers by challenging CPS’ false and incomplete narrative at every opportunity and demanding fiscal discipline and accountability.


Email: TroyLaRaviere@gmail.com
Twitter: @troylaraviere
Facebook: https://www.facebook.com/troylaraviere


STEPS YOU CAN TAKE

Sign CTU’s petition against Bank of America and withdraw any money you have in a BoA account.

Call and Email Mayor Rahm Emanuel and CPS CEO Forrest Claypool and tell each of them to do the following:

  1. Please focus your attention on bringing the appropriate parties to the table to share the sacrifice with our teachers. You can start with Bank of America, the Royal Bank of Canada, the Pritzker Group, Goldman Sachs, Northern Trust, and any number of the top Emanuel campaign contributors who have profited from our tax dollars.
  2. Be responsible financial stewards of our school district by adopting–in writing–the sound fiscal practices described above, and stop scapegoating our teachers for the financial recklessness of the mayor’s appointees.
  3. Click one of the share buttons at the end of the “References” section below to share this article with your circles.

 

Forrest Claypool
Email: feclaypool@cps.edu
Phone: 773.553.1500

Rahm Emanuel
Email/Feedback: https://webapps1.cityofchicago.org/eforms/org/cityofchicago/eforms/controller/contactUsForm/preFeedbackForm.do
Phone: 311 or 312.744.5000

 

 

REFERENCES & RELEVANT READING

Gillers, Heather & Grotto, Jason (November 10, 2014). Banks Kept CPS in Shaky Bond Market. Chicago Tribune.

Link: http://www.chicagotribune.com/news/watchdog/cpsbonds/ct-chicago-public-schools-bonds-banks-met-20141107-story.html


Gillers, Heather & Grotto, Jason (November 7, 2014).  CPS resisted sharing financial data with public.  Chicago Tribune.

Link: http://www.chicagotribune.com/news/watchdog/cpsbonds/ct-chicago-public-schools-transparency-met-20141107-story.html


Fang, Lee (September 15, 2014). Venture are capitalist poised to “disrupt” everything about the education market. The Nation.

Link: http://www.thenation.com/article/venture-capitalists-are-poised-disrupt-everything-about-education-market/


 

Vallas, Paul (August 25, 2015).  Remarks at the City Club (Video). [Relevant section begins at 36:10 point of the video.  Also contains remarks by Jesse Ruiz, Troy LaRaviere and Chuck Burbridge].



 

CTU Communications (February 1, 2016).  CTU Rejects Latest Contract Offer.

Link: http://www.ctunet.com/blog/ctu-board-of-education-offer-reject


 

Andrzejewski, Adam (March 25, 2015).  The Moral Bankruptcy of Chicago’s Elites: As the City Approaches Bankruptcy Chicago’s Elites Line their Pockets with Taxpayer Money.  Forbes Magazine.

Link: http://www.forbes.com/sites/adamandrzejewski/2015/03/25/moral-bankruptcy-of-chicagos-elites/


Chase, John; Coen, Jeff & Ruthhart, Bill (January 30, 2015). Rahm Emanuel Counts on Big Donors, with Many getting City Hall BenefitsChicago Tribune.

Link: http://www.chicagotribune.com/news/local/politics/ct-rahm-emanuel-political-donors-met-20150130-story.html#page=1


Chicago Tribune Editorial Board (July 2, 2015).  CPS: Stop Blaming Springfield.

Link: http://www.chicagotribune.com/news/opinion/editorials/ct-cps-rahm-emanuel-springfield-edit-0703-20150702-story.html


FitzPatrick, Lauren (March 25, 2014).  CPS Wants to Spend $10 Million on Office FurnitureChicago Sun-Times.

Link: http://chicago.suntimes.com/uncategorized/7/71/187614/chicago-public-schools-wants-to-spend-nearly-10-million-on-furniture-other-costs


Joravsky, Ben (December 3, 2014). How Investment Bankers are Set to Profit from Rahm’s Preschool PlanChicago Reader.

Link: http://www.chicagoreader.com/chicago/mayor-rahm-preschool-expansion-investment-bank-profits/Content?oid=15790297


Grotto, Jason & Gillers, Heather (November 7, 2014). Risky Bonds Prove Costly for Chicago Public Schools.  Chicago Tribune.

Link: http://www.chicagotribune.com/news/watchdog/cpsbonds/ct-chicago-public-schools-bond-deals-met-20141107-story.html#page=1


 

18 thoughts on “Saving CPS from CPS: Real Shared Sacrifice

  1. For those who say there is “no evidence” the banks swindled CPS.

    From the Tribune: http://www.chicagotribune.com/news/watchdog/cpsbonds/ct-chicago-public-schools-bonds-banks-met-20141107-story.html

    The Royal Bank of Canada’s inventory of auction-rate securities, for example, had ballooned from $250 million in January 2007 to $2 billion by the end of July, according to filings in a 2009 case that the SEC brought on behalf of investors after the market collapsed. Yet in June 2007, RBC representative James Pass wrote to CPS’ treasurer that auction-rate bonds were a “concise and cost-effective” strategy “ensuring CPS obtains the lowest cost of capital.” Pass did not respond to a request for comment.

    On Aug. 17, a senior BofA official said in an internal discussion that a shortage of cash from banks and investors “could trigger a ‘meltdown'” in the market, according to the SEC complaint against BofA. Later that month, in another internal discussion, senior BofA officials “expressed concern about the fragile nature of the (auction-rate securities) market,” the complaint said.

    Cepeda, whose firm was the lead adviser on the bond issue, said no bank officials warned her how unstable the market had become. The deal closed Sept. 5, municipal bond data show.

    In the weeks leading up to the deal with CPS, records show, Bank of America provided documents that laid out what the district might expect to pay over the next 23 years. The predictions, which assumed interest rates would remain stable and favorable, were simplistic at best, according to two experts on municipal securities who reviewed them at the Tribune’s request.

    “If this was not accompanied by anything else, it would be deceptive,” said Dave Sanchez, an attorney with the SEC’s Office of Municipal Securities from 2010 to 2013.

    Fichera said BofA should have calculated a range of possible outcomes, including a best-case scenario, a worst-case scenario and the middle ground, to show what the school district might pay depending on how rates moved and other risk factors.

    “To make informed decisions, a government finance official should have a lot more disclosure than this,” he said.

    Sanchez said the incomplete cost predictions, as well as BofA’s failure to warn CPS about the potential for a meltdown, raise questions about whether the bank violated a federal law that requires banks to “deal fairly” with government borrowers and not to engage in dishonest or deceptive behavior.

    “If any part of the bank has concerns that there may be a ‘meltdown’ and that’s not disclosed to the issuer, that would certainly raise questions of fair dealing,” Sanchez said.

    Click the following link to read more: http://www.chicagotribune.com/news/watchdog/cpsbonds/ct-chicago-public-schools-bonds-banks-met-20141107-story.html

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  2. Most of this is spot on. Just look at the Board Reports approved in Nov. Dec Jan and you will see the discrepancies between what CPS says and does. Does an agency that is paying 8.5% for borrowing need to spend over a million dollars on new uniforms or 5.8 million for CAMERAS this year alone, 28 million over the next four? The board reports will show waste on litigation settlements and principal training in December alone. Compound those cost with the interest and this city will never stop paying for fiscal mismanagement.

    Lets also look at the remaining Directors, Chiefs,Deputies, Senior employees working at the board and making above $90k to over 150K . What do they do? Lets just look up the job descriptions with Strategic in the descriptions and we have: Chief of Strategic Supports, Director of Strategic Partnerships, Exec. Director Strategic Management, etc. all making more than $90K . Claypool made a really big deal of boasting he would be eliminating middle management but really he didn’t and he should have defined what that meant and looked at all the middle and upper management employees managing maybe one employee? and basically attending meetings all day.

    Lets have an independent auditing company go in and really do an evaluation of central office employees not a Claypool lackey.

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