Gov. Bruce Rauner and Republican legislative leaders on Wednesday proposed a state takeover of Chicago Public Schools and permitting the troubled district to declare bankruptcy to get its finances in order, billing the controversial ideas as a “lifeline” and not “a state bailout.”
It’s the latest move as Gov. Bruce Rauner and Mayor Rahm Emanuel continue to play the blame game over CPS’ $480 million budget shortfall that threatens layoffs and has led to heavy borrowing to keep the state’s largest school district afloat.
Rauner offered perhaps his harshest criticism of Emanuel to date, suggesting the mayor “is ready to back down and cave into the teachers union” in current contract talks.
“The mayor has failed on this,” Rauner said of fixing CPS’ finances. “He’s failed on public safety, he’s failed on schools, he’s failed on jobs in the neighborhoods, he’s failed on taxes, he’s failed on reforms. And I’m tired of it. We have to take action.”
The governor said if the state gets involved, “we can take on the teachers union in Chicago. The mayor is afraid of them. He’s not taking them on. He caved in the teachers strike 41/2 years ago, and he’s sending the message right now, he’s going to give them what they want and then say, state pay for it. We are not going to let that happen.”
The Emanuel administration pushed back.
“Giving control of our children’s future to a governor who can’t pass his own budget, who is racking up billions in unpaid bills, and who is crippling higher education across the state makes zero sense,” Emanuel spokeswoman Kelley Quinn said. “With just a few weeks to go before delivering a second budget address without having passed his first budget, it’s clear the Republicans in Springfield are trying desperately to distract from their own failures.”
Democrats control the legislature, and both House Speaker Michael Madigan and Senate President John Cullerton made it clear the Republican takeover plan is dead on arrival at the Capitol.
“Gov. Rauner hopes to use a crisis to impose his anti-middle class agenda,” Madigan said in a statement. “Republicans’ ultimate plans include allowing cities throughout the state to file for bankruptcy protection, which they admitted today would permit cities and school districts to end their contracts with teachers and workers — stripping thousands of their hard-earned retirement security and the middle-class living they have worked years to achieve.
“When Detroit was granted bankruptcy protection, retirement security was slashed for employees and retirees. That is not the path we want to follow in Illinois.”
As described by the GOP leaders, the legislation would allow the Rauner-appointed State Board of Education to remove the current Chicago Board of Education and create an independent authority to run CPS until it is determined the district is no longer in financial difficulty. The leaders said the change would add CPS to a state financial oversight law that it is exempted from but that applies to all other Illinois school districts.
Another measure would allow school districts like CPS to declare bankruptcy, which could allow it to void union contracts. Rep. Ron Sandack, R-Downers Grove, acknowledged that’s a possibility under the bankruptcy option.
“We didn’t come to this lightly, but the track record of Chicago and its public school system is abysmal,” said Senate Republican leader Christine Radogno of Lemont.
House Republican leader Jim Durkin of Western Springs said “the goal here is to provide the tools to right the ship.”
Cullerton outright dismissed the plan, saying it “is not going to happen.”
“It’s mean-spirited and evidence of their total lack of knowledge of the real problems facing Chicago Public Schools. The unfair treatment of pension systems by the state is the immediate cause of CPS’ financial problem,” Cullerton said in a statement. “That situation ought to be addressed rather than promoting this far-fetched notion that the state is somehow in the position to take over Chicago schools. This ridiculous idea only serves as a distraction from the state’s problems that these two state leaders should be focusing on.”
The state covers the cost of teacher pensions in the suburbs and Downstate, but not for CPS, which has long had its own pension system. CPS instead gets more state money in other education areas as Chicago homeowners pay property taxes that cover teacher pension costs.
Durkin and Radogno tried to pressure Cullerton and Madigan on the issue.
“We are willing to help Chicago Public Schools, but we have been stonewalled by Mike Madigan and the Democratic majority to protect the status quo,” Radogno said.
Forrest Claypool, who Emanuel appointed to serve as CPS’ chief executive, said in a statement that the governor’s proposal was “a sideshow” and a “reckless smoke screen” that distracted from the district’s recent demands that lawmakers change how Illinois schools are funded and bail out CPS.
“In fact, while Republican leaders choreograph this distraction, CPS is taking steps to fix everything within our fiscal control and keep as much money in our classrooms as we can,” Claypool said in a statement.
“CPS and the CTU leadership are working feverishly to reach a deal that would cut costs while preventing midyear layoffs, the district is going to market with $875 million in bonds and we’re on the verge of even deeper cuts to the bureaucracy.”
The Chicago Teachers Union blasted the proposal, saying the legislation amounted to “the latest example of the ‘bull in a china shop’ methods in which (Rauner) clumsily attempts to lead.”
“A call for Springfield to assume responsibility of the finances of Chicago Public Schools is a non-starter when state government has so far been unable to assume responsibility for its own budget,” the union said in a statement.
Talk of a move to re-establish state fiscal oversight of the city’s schools has circulated since the summer and comes as bond ratings agencies have dropped CPS’ debt deeper into junk status in advance of district plans to add more than $850 million to its overall debt load.
The city’s schools have been under the state’s emergency oversight before. In 1980, a district fiscal crisis that prompted banks to withhold loans from CPS prodded state lawmakers to create the Chicago School Finance Authority to supervise schools.
CPS had to submit a balanced budget to the authority, which had power to keep school doors closed until it approved or rejected district spending plans and contracts.
That arrangement lasted until 1995, when a Republican-led legislature passed legislation that gave then-Mayor Richard M. Daley control of CPS. Daley quickly sought permission from Springfield to divert district pension dollars to other uses and saw the school system take its first partial pension holiday.