Quick Hit Ashlee Rezin Wednesday June 26th, 2013, 5:05pm

CPS Blames Deficit On IL Pension Crisis As Protesters Blast Budget Cuts At Board Of Ed Meeting (VIDEO)

More than 200 protesters picketed outside the Chicago Public Schools (CPS) headquarters Wednesday morning, condemning massive school closings and “devastating” proposed budget cuts derived from the district’s new per-student budgeting system.

Meanwhile, during a Chicago Board of Education meeting later the same morning, CPS CEO Barbara Byrd-Bennett cited Illinois’ “unsustainable” pension crisis as the “main driver” of the district’s $1 billion budget deficit.

Forty-eight school closures and more than 850 teacher layoffs were rolled out during the last two weeks of classes across the district, with the actions attributed to CPS' staggering budget shortfall.

“The deficit is real, and the challenges it presents to our district and our classrooms are real,” said Byrd-Bennett in her presentation before the Chicago Board of Education.

“Federal, state and local revenues have declined or remained flat for the last three years,” Byrd-Bennett said. “And while pension payments, teachers’ salary increases and other obligations we’re required to pay continue to rise by the hundreds of millions of dollars, we simply do not have an opportunity to gain additional revenue.”

The district owes $400 million in pension payments for the 2014 budgetary year, beginning July 1. During the spring legislative session, the Illinois General Assembly failed to pass legislation that would have permitted the district to continue contributing a reduced amount to the pension system over the next two years.

“I went to Springfield [in May, 2012] and I said, `If we don’t reform our pension, there are going to be some very difficult choices to be made. I warned everybody ... I said, `This is a critical decision',” Mayor Rahm Emanuel told the Chicago Sun-Times Wednesday. “[Lawmakers said], `Not now. We won’t deal with this.’ Small problems became big problems. When we all debate the choices around pensions, that’s exactly what’s happening.”

Almost 45 percent of the district’s enormous deficit is derived from CPS’ pension obligations, according Emanuel.

“The deficit will continue unless there is increased revenue,” said Byrd-Bennett.

But Chicago Teachers Union (CTU) Vice President Jesse Sharkey, who participated in the morning protest, said the union has not seen a “good faith effort” from CPS to raise revenue for the district.

“We want to know, will the board join us to demand a fair income tax out of Springfield? We want to know, will the board join us in the call for the mayor to declare a TIF surplus,” asked Sharkey, who added that cutting teacher pensions, which average $40,000 annually, would be “taking food out of the mouths of retired teachers.”

Here's more from Sharkey, who braved heavy rainfall and flash flood warnings to participate in the morning’s protests:

Sharkey and hundreds of protesters called on CPS to renegotiate “toxic” interest-rate swaps that reportedly take $35 million from the district annually.

The city of Chicago diverts $74.2 million every year from local government and taxpayer-backed organizations, like CPS, to pay off interest rates of 3 percent to 6 percent for loans negotiated during the Great Recession. If the interest rate increases, banks, such as Bank of America and Goldman Sachs, cover the losses and “swap” a certain percentage back to the public organization under interest-rate swap deals.

In a meeting last month, Bank of America executives met with CPS parents and representatives from the Grassroots Collaborative to discuss the interest-rate swap deals.

According to the Grassroots Collaborative, Patricia Holden, vice president of Bank of America, said at the meeting, “CPS could renegotiate, but they haven’t approached us ... This is between two parties and one of the parties is not at the table.”

Wednesday's protesters staged a small demonstration at a downtown Bank of America branch, chanting, "We need teachers, we need books! We need the money that banks took!"

In a statement, CPS said swap deals have allowed the district to reduce its interest costs on debt by roughly $70 million.

“CPS works with banks to reduce the rates it pays on money it has borrowed, similar to how a homeowner who refinances a mortgage to a lower interest rate will save money on a mortgage payment,” reads a CPS statement issued shortly after Wednesday’s Chicago Board of Education meeting. “Renegotiating swaps would signal that CPS can’t pay its debt and would cost the District more money in the long-term.”

Meanwhile, a new budgeting model for the 2013-2014 school year is being touted as a “fair and equitable means” to fund schools. CPS plans to provide principals with funding to spend at their discretion based on the number of students in their school, as opposed to allocating funds for specific staff positions.

The district said the new budgeting system “creates unprecedented autonomy for principals, giving them more control over the resources they can use to best meet the needs of their students.”

The draft figures CPS released to principals earlier this month amount to more than $82 million in cuts for 125 of the district’s 681 schools, according to Raise Your Hand, a grassroots coalition advocating for quality education.

“Did school closings add to the deficit this year,” asked Wendy Katten, executive director of Raise Your Hand. “We wouldn’t know because you voted for them with no cost benefit analysis.”

Whitney Young Magnet High School, a prestigious high school on Chicago’s West Side, is poised to see a budget cut of $1.1 million, according to Raise Your Hand. The organization reports that the school stands to lose more than eight faculty positions, an ACT prep program, a writing center, funding for substitute teachers, and reduced electives, such as music, business, art and world language courses. Also, students may be offered six classes instead of the traditional seven.

“This means less support for me during my last year of high school,” said Chris Pieper, 17, one of roughly five Whitney Young students to participate in Wednesday’s protest. “I’m going to be filling out college applications and taking tests, but I’ll have less resources at my disposal because of these crippling budget cuts.”

In an effort to soften the blow of less funding for the school, last week Whitney Young’s principal proposed charging students $500 for a seventh course.

“These are public schools, they are supposed to be schools that are for everybody and anybody,” said Pieper. “We just want the board of education to reconsider these budget cuts and make sure they aren’t as crippling and detrimental as they are now.”

Jitu Brown, education organizer for the Kenwood Oakland Community Organization (KOCO), called education a “human right."

"We've been sold a bill of goods that says they have to close schools because of a budget crisis, but we know that there are hundreds of millions of dollars available in TIFs," he said. "They just don't have the political will to dedicate, to pay the education debt that's owed black and brown communities."

Here's more from Brown:

Illinois’ pension debt, reaching nearly $100 billion, has resulted in $2 billion in education cuts and $3 billion in social service cuts, according to Gov. Pat Quinn.

In an open letter to state residents, Quinn said “Illinois is currently on track to be spending more on public pensions than on schools, which denies our children their right to a quality education.”

He has given the Illinois General Assembly until July 9 to come up with pension reform legislation.

“The budget CPS gave us is so bad that literally, we have to chose between toilet paper and a teacher,” said Eric Skalinder, 41, a music teacher who just completed his ninth year at Thomas Kelly High School on Chicago’s Southwest Side.

Kelly High School stands to lose $4 million under CPS’ new budgeting model, according to Raise Your Hand, resulting in the loss of 23 teachers and 10 non-teaching staff members.

If the draft budget figures are approved, Skalinder predicts the school will experience larger class sizes and a “devastating” reduction in resources.

“The horrendous mismanagement of this district is being paid for on the backs of teachers,” he said. “Instead of solving the problem with TIF reform, they’re manipulating people’s careers and using teachers as pawns in their game called education reform.”


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