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A divide began to emerge Thursday within the Chicago faculty board’s meatiest dialogue to date this yr over a metropolis pension fund cost that has pitted CPS leaders towards the mayor’s workplace.
Some board members appointed by Mayor Brandon Johnson or elected with Chicago Lecturers Union endorsement urged the district to pay the town $175 million to cowl a portion of an annual cost to fund the retirements of non-teaching faculty employees.
That cost has triggered a serious rift between district leaders — who be aware that the town, not the finances deficit-plagued district, is on the hook for the associated fee underneath state regulation — and Johnson, who insists the district should chip in because it turns into extra impartial from the town.
However different elected board members appeared to sign extra help for CPS’s stance that it’s the town’s accountability to cowl the pension price. They need to use the cash to cowl the price of new contracts with their academics and principals unions — each nonetheless underneath negotiation.
Subsequent week, the college board is anticipated to vote on an modification to the district’s finances for the present faculty yr. It would revise the $9.9 billion finances so as to add in an extra $139 million in tax income CPS acquired from the town.
But it surely leaves quite a lot of ambiguity about how CPS can pay for greater than $300 million in added prices.
On Thursday, on the first of two public hearings on the modification, district officers informed the board the modification’s open-ended phrasing offers members the leeway to resolve easy methods to spend the additional {dollars}. However they confused repeatedly, as they’ve up to now, that until the town comes via with extra funding, the district will want mid-school yr finances cuts to cowl each the price of the 2 contracts and the pension cost.
Board members puzzle over the best way ahead
Some board members made it clear they need the district to discover a approach to pay for the academics contract, a principals union settlement, and the pension cost. They argued that failing to fork over the pension cost would anger metropolis leaders and will make them withhold tax income from the district in coming years as punishment.
“We acknowledge that every one three are obligations that the district has, and we’re doing every thing in our energy to satisfy them,” mentioned board President Sean Harden.
However different board members mentioned that at a time of mounting fiscal pressures and uncertainty for CPS, the town shouldn’t move on prices it has traditionally coated to the district. Throughout the board, members voiced some uncertainty and even confusion about their choices and method ahead. Harden mentioned an upcoming report from Baker Tilly, the monetary consultants the board employed to assessment the finances, might be “a serious element to figuring out what our subsequent steps are.”
Board member Jitu Brown mentioned he spoke with some aldermen who signaled that they gained’t look kindly on a CPS refusal to kick in on the pension cost — and which may have an effect on their willingness to move on surplus tax income down the street.
“They gained’t be supportive of these sources coming to CPS for our long-term well being,” he mentioned.
However Carlos Rivas, one of many board’s elected members representing Humboldt Park, Hermosa, and Logan Sq., voiced skepticism, noting the town is legally obligated to move on a portion of surplus {dollars} from particular tax-increment-financing, or TIF, districts to CPS and can’t simply select to chop off the district.
One other elected faculty board member Jennifer Custer, who represents neighborhoods on the far Northwest facet of the town, famous that the additional TIF cash the district acquired from the town just lately isn’t even sufficient to cowl the pension cost.
Some mayoral appointees confused that CPS’s finances displays a file inflow of money from TIF surplus — a complete $298 million. In addition to the brand new $139 million in income from the TIF surplus within the modification, the finances already included $159 million from that supply.
Debby Pope, one other Johnson appointee, insisted that CPS ought to try to make that cost, maybe by “rearranging issues” in its finances. The district has chipped in for the pension fund in recent times, she famous; that fund, which she mentioned has been “outrageously underfunded” through the years, covers many CPS staff.
Some board members repeatedly invoked an possibility the mayor’s workplace has floated in current days — refinancing the district’s debt to eke out extra {dollars} for this yr’s finances — at the same time as district officers insisted CPS did all of the refinancing it might presumably do in the beginning of the college yr.
Metropolis officers argue for debt refinancing
Senior mayoral aides on Tuesday mentioned CPS might refinance current debt to release about $250 million with the intention to pay for each the pension reimbursement and elevated contract prices.
In an interview with Chalkbeat, Justin Marlowe, director of the Heart for Municipal Finance on the College of Chicago, mentioned CPS can be “hard-pressed within the present rate of interest setting” to refinance in a method that might release $200 million.
Marlowe added that the district might attempt to do “an excessive scoop and toss” the place they make zero principal funds for a number of years after which face ballooning funds in 15 or 20 years.
“It looks like a commerce off they’re simply not keen to make,” he mentioned.
To raised perceive these and different monetary choices, some board members, comparable to Johnson appointee Michilla Blaise, referred to as for an opportunity to query outdoors consultants and metropolis leaders, maybe as early because the second public listening to on the modification on Friday.
In the meantime, different board members, comparable to Karen Zaccor, one other Johnson appointee, referred to as on the district to settle its contract with academics so the board would know precisely how a lot cash it wanted to steer to that this yr.
“It will be actually vital to get it executed as quickly as doable,” she mentioned. “We are able to have precise numbers and never these theoretical numbers we are able to supply.”
Chicago Lecturers Union leaders, organizers, and members packed the accessible public listening to slots Thursday, asking the board to press district officers to provide in on quite a few CTU contract negotiation priorities: extra preparation time for elementary academics, much less frequent instructor evaluations, smaller class sizes, and extra staffing. And so they urged the district to settle its four-year contract with academics — with negotiations nearly a yr within the works — earlier than passing the modification.
Two-thirds of the 21-member faculty board must vote sure for the modification to move. Some members have informed Chalkbeat they plan to oppose the modification as a result of they consider the district can not and mustn’t need to deal with the pension cost. When former Mayor Lori Lightfoot handed on a few of that pension fund’s prices to CPS, the academics union sharply criticized her for balancing the town’s finances on the backs of scholars.
CTU leaders didn’t instantly tackle the pension cost on Thursday. However Stacia Scott Kennedy of SEIU Native 73, which represents help employees in CPS, cautioned the board about protecting the pension cost at any price, together with by reducing employees or additional indebting the district.
“These chickens come residence to roost years from now,” she mentioned. “It’s the youngsters and the employees who come to undergo from these choices.”
At Thursday’s assembly, district leaders and board members appeared to agree on one factor: The district and the town should work out a transparent approach to deal with monetary obligations every has struggled to cowl within the longer run. Brown mentioned he desires a complete plan from district leaders on addressing CPS’s finances challenges.
“It’s nearly like we’re in a ship, and we have now duct tape on the underside of it, and we’re simply hoping a leak doesn’t spring,” he mentioned.
The subsequent public listening to is 10:30 a.m. Friday, March 14 on the district headquarters, at 42 W Madison St.
Becky Vevea contributed to this report.
Mila Koumpilova is Chalkbeat Chicago’s senior reporter protecting Chicago Public Faculties. Contact Mila at mkoumpilova@chalkbeat.org.