The Board of Education appointed by Mayor Brandon Johnson has refused to take over a pension payment that the mayor had insisted the school district pay. And the board and Chicago Public Schools leaders are strongly opposed to a request from City Hall for a loan to cover the payment and a new contract with the Chicago teachers union, sources told the Chicago Sun-Times and WBEZ.
The stunning rejections from the Johnson school board and district leaders come as discussions continue over the short-term, high-interest loan that CPS officials and board members fear could impact the district’s financial health.
Tensions over debt and pension payments were at the heart of the one-month delay in the school system’s draft budget, published on Wednesday.
CPS is facing a $505 million deficit, and the district’s preferred plan to close that gap involves cutting the administrative budget, laying off central office staff, restructuring debt and leaving vacancies unfilled. District leaders said they believe those are the best options after failing to secure more funding from state lawmakers.
The mayor said publicly the day after the district’s budget was released that he would not accept any cuts. His office said Friday that Johnson agreed with operational efficiencies but opposed any reductions to “essential support staff” in schools. His deputy mayor for education said the administration was “working on something” to accommodate those wishes.
“The City, Chicago Public Schools and the Chicago Board of Education are engaged in ongoing discussions to find solutions to the serious fiscal challenges facing the school district,” the mayor’s office said in a statement.
Four sources told the Sun-Times and WBEZ that the city asked CPS to take out a short-term, high-interest loan to avoid budget cuts that would have to be made to pay for pensions and contracts for the CTU and the newly formed principals union. CPS officials worry that a one-size-fits-all solution to this year’s deficit could deepen next year’s hole, quickly approaching $900 million.
CPS has had to take on debt to solve its financial problems and fix its schools in the past. It currently has about $9.3 billion in long-term debt. This year, it plans to pay off $817 million, which means that about $3,000 for every student who could continue their education will go toward paying down its debt.
The payment of pensions to the Municipal Employees Pension and Benefit Fund, which covers the retirement of CPS school clerks, teaching assistants and other non-teaching staff, has been a source of friction since former Mayor Lori Lightfoot shifted much of the cost from the city budget — where it historically resided — to CPS accounts. Johnson was working for the CTU when it said Lightfoot was “ripping off CPS” and “stealing from students” in doing so.
But during this year’s budget talks, Johnson pushed CPS to contribute $175 million to the fund. And his administration believed the district and the board of education had agreed to do so.
It turns out that this is not the case.
The district budget released this week does not list pension payments as an expense, according to the district.
Board Chairman Jianan Shi and other board members could not be reached for comment.
The mayor’s former employer, the CTU, has grown increasingly hostile to CPS CEO Pedro Martinez over the past week, quickly souring their once-cordial partnership. In his strongest statement yet, CTU Vice President Jackson Potter said Friday that Martinez’s budget was “an act of fiction” and “the product of a man leading with his hands over his eyes.”
“This is not based on the needs of our students or our city. It is structural inequality disguised as fiscal responsibility,” Potter said in a statement. “Instead of aggressively addressing the state’s underfunding of our schools, he would rather have Black and brown students foot the bill. Proposing something poorly thought out is the opposite of accountability.”
Some CPS leaders were disappointed not to receive more help from the city as they negotiate a new contract with the Chicago teachers union, a source familiar with the negotiations said.
The CTU has also criticized the school district’s past loans, but Potter suggested last week that there were better lending options. He said the CTU does not favor bad deals from the past, calling them “complicated financial instruments that were essentially predatory loans or payday loans in disguise.”
“We are not going to allow that to happen,” he said.
Potter said the real issue is that the state and federal government should provide more support to schools. He also said the school district should look at whether it can recoup money from past bad deals.
Assemblywoman Jeanette Taylor (20th), chair of the city council’s education committee chosen by the mayor, said she strongly opposed using a “high-interest loan” to avoid school layoffs.
“To me, it’s a no. I don’t think it makes sense,” Taylor said Friday. “Going to the reserve fund. Why should we go into debt again?”
“Don’t you know we’re already in a pension crisis? We’re in all these crises and we’re not doing what we need to do to try to solve them. Before we make that decision, we have to weigh all the options. What are the other options? … Have we looked at everything we can look at before we make that decision?”
Taylor said she does not blame the CTU for pressuring Johnson to borrow money to avoid school layoffs.
“The union has nothing to do with this. This is about making sure these kids get what they need,” Taylor said.
“Previous administrations made serious mistakes and now we have to face the consequences. But we have to differentiate ourselves from them. So I hope we will look at all options before we embark on a high-interest loan.”
News Source : chicago.suntimes.com
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