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Rauner to the Rescue

eye on the news

Rauner to the Rescue

The Illinois governor’s bid to take over the Chicago school system faces hurdles—but something must be done. January 21, 2016
Education
Economy, finance, and budgets

In summer 2012, with Chicago schools confronted with a frightening $600 million deficit, Mayor Rahm Emanuel asked the teachers’ union for concessions to help bolster the budget and improve students’ academic performance. Instead, teachers went on strike for seven days. Emanuel capitulated to most of their demands, including approximately $100 million in pay increases. Though critics warned that the school system’s finances were dangerously out of balance, neither Chicago officials nor state leaders in Springfield did much to address the crisis, and things have grown steadily worse. Now Chicago teachers are threatening to shut the system down again unless the state kicks in funding for raises.

On Wednesday, Illinois governor Bruce Rauner startled observers when he proposed a state takeover of the flailing system. He noted that part of the problem was that Emanuel had “caved in the teachers strike four and a half years ago, and he’s sending the message right now (in contract talks that), he’s going to give them what they want” again, and ask the state to pay for it. The schools already face a $480 million deficit that could leave the system out of cash before the school year ends. Next year’s shortfall is projected at $1 billion on revenues of just $5.5 billion. On Wednesday, Fitch Credit ratings—noting that the system had spent virtually all its reserves—hit Chicago schools with a triple credit-rating downgrade, to junk-bond status “that reflects the limited progress Chicago Public Schools has made in addressing a structural budget gap.”

Rauner’s critics, both in Illinois Democratic circles and in the press, are characterizing the takeover proposal as part of the Republican governor’s “anti-union agenda.” Politico suggested that Rauner’s desire is “to prove himself as a Scott Walker-style conservative.” The accusation ignores how Democratic governors have also moved to take over sinking school districts in the face of union opposition. In 2009, then-Michigan governor Jennifer Granholm put the Detroit school district under state control. The schools had used hundreds of millions in borrowed money to fund day-to-day operations rather than make budget cuts as enrollment declined. In 1993, New Jersey Democratic governor Jim Florio launched an investigation of mismanagement and poor performance in the Newark school system that eventually led to a state takeover under his successor, Republican Christine Whitman. Newark schools have remained under state control for 20 years, through the administrations of six governors, three of whom were Democrats. Under Florio, the state also seized the Paterson school district in 1991.

No doubt, the antagonistic and radicalized Chicago Teachers Union presents a major obstacle to school reform. But challenging the CTU hardly represents an anti-union agenda, especially in a city where Democratic leaders have frequently clashed with the union, too. The CTU turned especially confrontational after activists led by Karen Lewis captured control of the union in 2010. Before launching their 2012 strike, union leaders visited a national teachers’ convention, where they urged delegates from other cities to resist education-reform efforts. In the ensuing Chicago strike, teachers fought Emanuel over his plans to change the teacher-evaluation system and give principals more hiring authority. Now they’re demanding up to $450 million in state aid to bail out the entire system.

Illinois’ Democratic state legislature would have to approve Rauner’s takeover plan, including a change in state law that would let the Chicago system file for bankruptcy protection and reorganize its finances. Democrats termed Rauner’s proposals “a sideshow” and “mean-spirited.” But the Chicago Tribune pointed out that Democrats have no “fresh ideas” on fixing the school system and oppose the bankruptcy idea only because it “would be a political embarrassment” to the party that had controlled the schools for years.

Indeed, Democrats in Springfield have played a part in the crisis. In 2010, at union urging, they passed legislation requiring municipalities and school districts gradually to increase their pension contributions—but they crafted the law to put the burden of increasing payments entirely on property-tax payers. Chicago’s chief financial officer back then, Dana Levenson, noted in an op-ed that union leaders hadn’t ruled out the idea of “shared sacrifice” to fix the problem, but no state official had “asked for any sacrifice” from workers. Chicago and other municipalities warned that the new legislation would create a fiscal cliff for budgets starting in 2016.

Now that cliff is here. Chicago’s own pension payments are nearly doubling this year to $1 billion, and the city is raising property taxes by hundreds of millions in response. Chicago Public Schools borrowed money to make a $684 million pension payment last June; CPS faces a $700 million payment next year. Rauner says that he’d consider providing aid—though the state’s budget is hardly robust—but only if the schools agree to something in return, namely, reforms that would improve educational quality and stabilize the system’s finances. Those are concessions that the union, the schools, and the legislature have resisted for years.

As the Tribune noted, “The GOP proposals recognize reality: The Chicago school financial crisis is here.” And it wasn’t Rauner who created the crisis.

Photo by Scott Olson/Getty Images

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