All you defenders of the teachers unions get your lame excuses and false facts ready.
Republicans Won’t Let Chicago’s School Crisis Go to Waste
In exchange for bailing out the Windy City, Illinois’s Gov. Rauner wants a serious voucher program.
Allysia FinleyUpdated Aug. 25, 2017 6:56 p.m. ET
A Chicago Teachers Union protest outside City Hall, July 2, 2015. Photo: Associated Press
By
Allysia Finley
Chicago Mayor Rahm Emanuel once observed shrewdly that a crisis is an “opportunity to do things you think you could not do before.” His words ring especially true in Illinois, which is about to enact one of the largest private-school scholarship programs in the country. The breakthrough has been made possible by a fiscal crisis in the nation’s third-largest school district.
Chicago Public Schools expects to run a $544 million deficit in the coming fiscal year and is at risk of defaulting on debt payments. Legislative leaders in Springfield have been working around the clock on a new school-funding formula that would bail out CPS. In return for his signature, Gov. Bruce Rauner, a Republican, has demanded a tax-credit scholarship program for poor kids to attend private schools. Seventeen states have similar programs, which provide tax credits for contributions to nonprofit scholarship funds.
In 2010 a voucher program passed the state Senate but died in the House primarily due to opposition from Chicago Democrats. But now the city’s Democrats, including House Speaker Michael Madigan, are more receptive. That’s because a straight-up bailout of Chicago schools would invariably reduce funding for downstate districts. It simply doesn’t have enough support in the state House to pass.
Schools across the state, including those in Chicago, may not open on time if lawmakers don’t pass a new funding formula next week. Democrats could blame the debacle on Mr. Rauner, but shutting down schools statewide to force a bailout of Chicago schools isn’t popular anywhere—not even in Chicago. And CPS desperately needs state cash to maintain access to credit markets due to its history of financial mismanagement.
In 1995, amid financial duress, the state established a block grant to help Chicago pay for special education, transportation and nutrition programs. In 2017, Chicago schools benefited to the tune of $250 million. As part of the deal, the state handed control over Chicago teacher pensions to then-Mayor Richard Daley, who took a 10-year “holiday” from payments. According to the Illinois Policy Institute, this allowed the district to divert more than $1.5 billion from teacher pensions to pay and other perks.
In 2011 Chicago suspended pension payments again for three years to prevent massive teacher layoffs and benefit reductions. After teachers went on strike for seven days in 2012, the district awarded the union a 17.6% pay increase over four years.
A few years later, facing a $1.1 billion structural deficit, the Chicago Board of Education approved $1 billion in borrowing. Last summer, the district increased property taxes by $250 million to make an obligatory pension payment, but later agreed to a new contract boosting teacher salaries by 4.5%. Now pensions are underfunded by $11 billion.
Mindful of the investment risk, creditors are charging junk-rated Chicago schools a premium to borrow. To pay its bills the district borrowed $725 million at an 8.5% interest rate in March and another $387 million at 6.4% in June. In July the school district issued $500 million more in debt at a rate of about 7.25%to repay creditors. The Chicago Board of Education is counting on a state bailout to repay all of this debt.
Meanwhile, student enrollment is plummeting, and not only because more kids are attending charter schools. Crime, high property taxes and lousy schools—only a quarter of eighth-graders scored proficient in math on the National Assessment of Educational Progress—are to blame for an exodus of black families. According to the U.S. Census Bureau, Chicago was the only major city to lose population in 2015-16.
While the status quo is unsustainable, the Chicago Teachers Union has demanded that state lawmakers hike property and business taxes to pay for their pensions. But even the union seems to realize that it has overplayed its hand. See its press release this week charging that “Mayor Rahm Emanuel and Gov. Bruce Rauner are knowingly sabotaging Chicago’s public schools” and “supporting a plan that will give money to private schools that could be directed to our public school classrooms.”
Illinois sources say a deal supported by legislative leaders could be announced this weekend that will provide $100 million in tax-credit scholarships for low-income kids. This would represent the biggest first-year scholarship funding among any tax-credit program in the country. Each scholarship would be worth up to $12,280—roughly equal to Illinois’s average per-pupil funding. Special-needs students could receive more. Families with incomes up to 300% of the poverty line would be eligible, but lower-income kids and those attending failing schools would have priority.
Until recently the focus in Springfield has been on shoring up the state fisc. But now that the state budget stalemate is over, the governor and legislature have an opportunity to turn Chicago’s school crisis into a bipartisan victory helping thousands of low-income kids. As Mr. Emanuel once said, “you never let a serious crisis go to waste.”
Ms. Finley is an editorial writer for the Journal.
Appeared in the August 26, 2017, print edition.
Republicans Won’t Let Chicago’s School Crisis Go to Waste
In exchange for bailing out the Windy City, Illinois’s Gov. Rauner wants a serious voucher program.
Allysia FinleyUpdated Aug. 25, 2017 6:56 p.m. ET
A Chicago Teachers Union protest outside City Hall, July 2, 2015. Photo: Associated Press
By
Allysia Finley
Chicago Mayor Rahm Emanuel once observed shrewdly that a crisis is an “opportunity to do things you think you could not do before.” His words ring especially true in Illinois, which is about to enact one of the largest private-school scholarship programs in the country. The breakthrough has been made possible by a fiscal crisis in the nation’s third-largest school district.
Chicago Public Schools expects to run a $544 million deficit in the coming fiscal year and is at risk of defaulting on debt payments. Legislative leaders in Springfield have been working around the clock on a new school-funding formula that would bail out CPS. In return for his signature, Gov. Bruce Rauner, a Republican, has demanded a tax-credit scholarship program for poor kids to attend private schools. Seventeen states have similar programs, which provide tax credits for contributions to nonprofit scholarship funds.
In 2010 a voucher program passed the state Senate but died in the House primarily due to opposition from Chicago Democrats. But now the city’s Democrats, including House Speaker Michael Madigan, are more receptive. That’s because a straight-up bailout of Chicago schools would invariably reduce funding for downstate districts. It simply doesn’t have enough support in the state House to pass.
Schools across the state, including those in Chicago, may not open on time if lawmakers don’t pass a new funding formula next week. Democrats could blame the debacle on Mr. Rauner, but shutting down schools statewide to force a bailout of Chicago schools isn’t popular anywhere—not even in Chicago. And CPS desperately needs state cash to maintain access to credit markets due to its history of financial mismanagement.
In 1995, amid financial duress, the state established a block grant to help Chicago pay for special education, transportation and nutrition programs. In 2017, Chicago schools benefited to the tune of $250 million. As part of the deal, the state handed control over Chicago teacher pensions to then-Mayor Richard Daley, who took a 10-year “holiday” from payments. According to the Illinois Policy Institute, this allowed the district to divert more than $1.5 billion from teacher pensions to pay and other perks.
In 2011 Chicago suspended pension payments again for three years to prevent massive teacher layoffs and benefit reductions. After teachers went on strike for seven days in 2012, the district awarded the union a 17.6% pay increase over four years.
A few years later, facing a $1.1 billion structural deficit, the Chicago Board of Education approved $1 billion in borrowing. Last summer, the district increased property taxes by $250 million to make an obligatory pension payment, but later agreed to a new contract boosting teacher salaries by 4.5%. Now pensions are underfunded by $11 billion.
Mindful of the investment risk, creditors are charging junk-rated Chicago schools a premium to borrow. To pay its bills the district borrowed $725 million at an 8.5% interest rate in March and another $387 million at 6.4% in June. In July the school district issued $500 million more in debt at a rate of about 7.25%to repay creditors. The Chicago Board of Education is counting on a state bailout to repay all of this debt.
Meanwhile, student enrollment is plummeting, and not only because more kids are attending charter schools. Crime, high property taxes and lousy schools—only a quarter of eighth-graders scored proficient in math on the National Assessment of Educational Progress—are to blame for an exodus of black families. According to the U.S. Census Bureau, Chicago was the only major city to lose population in 2015-16.
While the status quo is unsustainable, the Chicago Teachers Union has demanded that state lawmakers hike property and business taxes to pay for their pensions. But even the union seems to realize that it has overplayed its hand. See its press release this week charging that “Mayor Rahm Emanuel and Gov. Bruce Rauner are knowingly sabotaging Chicago’s public schools” and “supporting a plan that will give money to private schools that could be directed to our public school classrooms.”
Illinois sources say a deal supported by legislative leaders could be announced this weekend that will provide $100 million in tax-credit scholarships for low-income kids. This would represent the biggest first-year scholarship funding among any tax-credit program in the country. Each scholarship would be worth up to $12,280—roughly equal to Illinois’s average per-pupil funding. Special-needs students could receive more. Families with incomes up to 300% of the poverty line would be eligible, but lower-income kids and those attending failing schools would have priority.
Until recently the focus in Springfield has been on shoring up the state fisc. But now that the state budget stalemate is over, the governor and legislature have an opportunity to turn Chicago’s school crisis into a bipartisan victory helping thousands of low-income kids. As Mr. Emanuel once said, “you never let a serious crisis go to waste.”
Ms. Finley is an editorial writer for the Journal.
Appeared in the August 26, 2017, print edition.
