Chicago Schools Borrow At High Interest Rates, District Considers Civil Rights Lawsuit Against State of Illinois

Chicago Public Schools is broke. Mayor Rahm Emanuel previously asked Republican Governor Bruce Rauner for funds to tide the largest school district in the state over. Rauner said no, but instead offered CPS the opportunity to file for bankruptcy and have the state takeover. This is when Emanuel responded negatively and decided that an $875 million bond deal at a low interest rate would at least keep the schools afloat until the end of the academic year. If not, District 299, which encompasses the entire city of Chicago, would run out of funds by April.

The plan didn’t go as intended, and the bonds sold for $725 million at an 8.5 percent interest rate. Earlier this month, the state sold bonds at about half of the 8.5 percent rate. Chicago’s mayor said the deal CPS brokered is directly related to Rauner’s negative talk about bankruptcy and a state intervention. Rauner denied the allegations.

There is also a problem with the allocation of funds to Chicago schools compared to both suburban and downstate schools. Per Emanuel, public schools in the city receive 27 percent less support from the state than suburban and downstate schools. Chicago taxpayers pay all the retirement costs for the city’s teachers, but income taxes from city residents also help pay for suburban and downstate pensions, per ABC 7 News. Forrest Claypool, CEO of the system, said the current system is unfair.

“We simply want equality. That’s all we’re asking for. Equality in funding from the state of Illinois.”

Emanuel agreed, adding, “It’s unfair to students, it’s unfair to teachers and it’s unfair to taxpayers.” Claypool said if Illinois chooses not to change the funding formula, a lawsuit is in order. Rauner doesn’t seem phased and responded, “What I do not support and never will support is taking money from one district and giving it to another district. That I do not support,” added ABC 7 News. A civil rights suit against the state might take years to settle and won’t help schools in the immediate future.

Problems are systemic and didn’t start recently. In 1979, the schools went bankrupt, and former Mayor Richard M. Daley began oversight of the system around 1995. The effects of the city-run schools have impacted virtually all ethnic groups. The demographics for these groups are telling, and the numbers on 20 – 24 year old males who didn’t complete high school and can’t find jobs are large, noted the Chicago Sun-Times. Nearly 47 percent of black males; 19.9 percent of Hispanics; and 10 percent of white males fall into this category.

What is not in question is that the city’s children are suffering. In September 2012, the teachers went on a strike that lasted nine days. They had worked without a contract for months, and negotiations had failed to produce an acceptable one. Now, despite the closing of over 54 Chicago schools and the resignation of former CEO Barbara Byrd-Bennett who pled guilty to corruption charges, the schools are unable to keep their doors open, let alone provide a quality education.

Although Emanuel and president of the Chicago Teachers Union, Karen Lewis, have had major differences in the past, they’ve joined together to fight Rauner, regarded by both as the enemy. Neither Lewis or Emanuel welcome state oversight, which is, in part aimed at diminishing the powerful CTU. Lewis weighed in on the crisis, added ABC 7 News.

“We have a common enemy, Bruce Rauner, who is trying to actually bankrupt us and bring legislation to that effect and we’ll be fighting that together.”

Meanwhile, CTU has not accepted the last contract proposal, which Lewis states is partially due to distrust of the mayor. The saga continues and beyond this academic year, what is known is that if money isn’t found somewhere, it’s likely that bankruptcy will be the only option for public schools in the nation’s third largest city.

[Photo by Scott Olson/Getty]