In a rally led by the Chicago Teachers Union and other community groups, almost 50 people joined together at Chicago City Hall earlier last week asking for city and school officials to find a way to regain money spent on expensive school borrowing deals.
Some of the protesters ended up being removed by police.
“I want to send a message to the bankers: ‘We don’t have any more money to give you,’ ” said Nelson Soza, executive director of the Pilsen Alliance. “The children don’t have any more money. Renegotiate these deals.”
Mayor Rahm Emanuel replied to the protests by saying he does not think it is possible to get any of the money back, stating “there’s a thing called a contract.”
Meanwhile, advocates have come forward with multiple ideas for fixing the issues. CTU Vice President Jesse Sharkey came to the rally with an application for arbitration with the Financial Industry Regulatory Authority. The company is in charge of the largest dispute resolution forums in the securities industry.
It is unclear if the statute of limitations for filing a FINRA claim is still open. Brad Miller, an attorney who has worked with the Chicago Teachers Union, believes a lawsuit would be a better route.
“Illinois law does not apply the statute of limitations to claims by government entities,” he said in an email. “The city and CPS can bring claims in court under Illinois state law and not have a timeliness problem.”
Another idea came from Saqib Bhatti of the New York City-based Roosevelt Institute, who suggested that Emanuel “use the full economic leverage of the city of Chicago to negotiate a better deal and say ‘If you don’t give us our money back, we won’t do business with you anymore.’ ”
School board member Henry Bienen, also the former Northwestern University President, said he would be willing to look into ideas on how to recoup the money. However, he said he does not believe any money was lost by the district in any of the deals.
An investigation by The Chicago Tribune found the district’s issuance of $1 billion in auction-rate funds between 2003 and 2007, combined with interest-rate swaps, to possibly cost the district $100 million more than traditional fixed-rate bonds would have.
“They were gambling with our children’s future,” 2nd Ward Ald. Bob Fioretti said Wednesday in a Tribune interview.
Fioretti is leading an effort of eight alderman who are asking for a hearing to discuss the borrowing practices of Chicago Public Schools.
In addition, at the last school board meeting this past Wednesday, Fioretti asked the mayor and school board to either bring a lawsuit or an arbitration claim against banks that are involved in the CPS deals.
“We closed over 50 schools supposedly to help save the budget, but meanwhile we lost more than $100 million gambling on Wall Street,” Fioretti said at the school board meeting, held at George Westinghouse College Preparatory High School. “That’s $100 million that could have been used to save some of these schools, pay our teachers, provide resources to our struggling schools and more.”