PI Original Matthew Blake Wednesday September 19th, 2012, 6:32pm

Teachers Strike Over But Budget Problems Have Only Started

The Chicago Public Schools management team breathed a sigh of relief yesterday as the Chicago Teachers Union House of Delegates voted to suspend the CTU strike and let their membership consider a new contract. But while teachers are expected to green light the deal, CPS does not know how to pay for it.

The Chicago Public Schools management team breathed a sigh of relief yesterday as the Chicago Teachers Union House of Delegates voted to suspend the CTU strike and let their membership consider a new contract. But while teachers are expected to green light the deal, CPS does not know how to pay for it.

For all the district and union feuding that the strike exacerbated, the contract itself looks like a triumph of the collective bargaining process. CPS saves significantly compared to the last deal, while the union can credibly trumpet wins on core issues like salaries and health care benefits.

But the CPS budget crisis involves revenue and pension issues that transcend the new contract.

The only major policy change floated to address the crisis stem from reports that CPS will close a whopping 80 to 120 neighborhood schools, a story that CTU says they believe, but CPS does not confirm. Budget ideas championed by the union, such as funneling Tax Increment Finance, or TIF, property tax dollars to the schools and increased state aid are thus far on the periphery of the budget conversation.

The budget situation means that even with the strike suspended, CTU is guarded. “Next week there will be something else,” CTU President Karen Lewis said at a press conference right after the House of Delegates vote yesterday. “I’m sure they’ll be school closing issues. They’ll be pension issues.”

The new contract would last for three years with the option of a fourth, if both sides agree upon it. CPS estimates that the contract will cost the district $74 million a year compared to the $129 million annual cost of the last deal, an annual savings of 74 percent.

CPS spokeswoman Robyn Ziegler could not immediately provide specifics as to how the district arrived at the $74 million figure. But Rod Estvan, education policy analyst for the disability rights group Access Living, says this estimate is “probably correct.”

Estvan says the savings would come from a drop in the annual salary increase for teachers compared to the last contract, and a declining overall number of tenured teachers due to retirements and layoffs.

Teachers will receive a combined seven percent raise over three years with another three percent salary hike in the optional fourth year. This is less than the four percent annual raise teachers got in the last contract. But the contract also codifies an interim agreement made this summer that the longer school day does not mean longer work hours for teachers. Also, teachers were able to retain the same health care benefits that were outlined in the last contract, something CPS initially blocked, as long as they enter a wellness initiative created by Mayor Rahm Emanuel.

Still, the $74 million is $74 million that CPS simply does not have right now. The $5.2 billion budget the Board of Education approved in August both did not include these raises and health care costs and also drained the entire $349 million CPS reserve fund.

Ziegler declined to provide specific cost-savings or revenue generators the district may use to pay for the contract. “We are analyzing the budget to determine what cuts need to be made,” she said.

CTU staff coordinator Jackson Potter says he suspects Emanuel may use his power to transfer money from other city agencies, such the Chicago Police Department, to pay for the contract. Potter also claims that “there is enough evidence out there” to believe CPS will look at large-scale school closings, such proof includes a presentation that CPS Chief Portfolio Officer Oliver Sicat gave to the Board of Education last year.

Potter says that instead of these closings, the union would instead like to see CPS reverse their policy of spending more money on charter schools.

The union wants to work with the district in two key ways to attempt to get more money for the budget.

One is curbing the TIF economic development program. Fifty-four percent of Chicago property tax dollars go to CPS. However, a substantial annual cut of this money, $454 million in 2011, is routed to TIFs. “Hundreds of millions are diverted away from schools each year,” says Amisha Patel, executive director of the Grassroots Collaborative.

Even if the TIF program largely stays as is, the union would still like to see the annual surplus of TIF money routed to schools.

The second key revenue issue is more state aid. Ralph Martire, executive director of the Center for Tax and Budget Accountability, says that Illinois is “dead last in the portion of education funding school districts receive from the state.” Nationally, the average school district gets about 50 percent of their funding from statehouses. According to a Chicago Civic Federation report on the latest budget, CPS gets 29.5 percent of its money from Springfield.

According to Potter, the new contract includes language that requires CPS to work with the union on generating revenue. “They have to lobby for more school funding,” Potter says. Ideally, CTU would like to see CPS join their call for a graduated income tax.

The urgency of CPS budget issues are due not just to the new contract, but also the expiration next year of a three-year partial pension “holiday” where the district made reduced contributions to the teacher retirement fund.

The politically centrist Civic Federation has long castigated CPS for the holiday, estimating that it means $348 million in extra pension contributions next year. Progressive budget experts have also scratched their heads over why CPS lobbied the state for a temporary payment reprieve that likely means long-term fiscal pain.

“CPS is in a fix, but it is a fix of its own making,” Martire says.

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