Rauner, GOP Float Bankruptcy Proposal for Chicago Schools


Illinois Republican Gov. Bruce Rainer, along with Republican lawmakers, are close to revealing plans that would allow Chicago Public Schools to declare bankruptcy and would place the financially strapped district under the supervision of the state, according to Rick Pearson and Kim Geiger of The Chicago Tribune.

The governor and Mayor Rahm Emanuel are continuing to blame each other for CPS’ $480 million budget deficit that may result in reducing the number of teachers in classrooms and has already led to a distressing amount of borrowing just to keep the largest school district in the state open for business.

The proposals are scheduled to be presented on Wednesday by House Republican leader Jim Durkin and Senate Republican head Christine Radogno. The fiscal issues that continue to plague the city of Chicago and the Chicago Public School District may lead to the plan including a condition for the city to also declare bankruptcy, said a source.

Emanuel does not support Rauner’s bankruptcy option for City Hall and would rather have the state provide more funding to cover CPS’ pension costs.

“The mayor is 100 percent opposed to Gov. Rauner’s ‘plan’ to drive CPS bankrupt. If the governor was serious about helping Chicago students, he should start by proposing — and passing — a budget that fully funds education and treats CPS students like every other child in the state,” Emanuel spokeswoman Kelley Quinn said in a statement Tuesday.

In a radio interview, Radogno pointed out that the bankruptcy idea would force the district to nullify its union contracts, which would help Rauner’s overall push to weaken the teachers union. Bankruptcy would also release the district from its pension responsibilities. The Republican legislators feel they are “throwing CPS a lifeline.”

The proposed measure would make a way for the Illinois State Board of Education to remove the Chicago Board of Education and appoint an independent agency to run the district until the state board decides the Chicago district is out of its financial crisis. Then CPS control would be transferred to an elected school board, reports CBS Chicago.

The Christian Science Monitor’s Lonnie Shekhtman writes that Democratic leadership says the plan will be intensely opposed and will appear at the Capitol “dead on arrival.”

Senate President John Cullerton (D-Chicago) said the plan showed a total lack of understanding of the actual problems facing CPS. He added that CPS’ financial problems were caused by the unfair treatment of pension systems by the state.

In Chicago, unlike other state districts, residential property taxes cover teacher pension costs. Elsewhere in the state pensions are paid by the state. Because of this, Chicago’s school district gets more money from the state for other expenses.

But for the past 20 years, sloppy financial regulations have made it easy for the city to reroute teacher retirement fund contributions to other accounts, which has put the city millions of dollars in the hole on its pension commitments, under the watches of Mayor Richard Daley and current Mayor Rahm Emanuel.

Although it is doubtful the bankruptcy proposal will be passed, if it were to make it through the rigorous process of being approved, it would be the first time a major school district in the country has gone bankrupt.

The City of Detroit declared bankruptcy and their creditors got paid first, along with the attorneys running the bankruptcy. That meant there was less money left for city operations, reports Lauren Fitzpatrick of the Chicago Sun-Times. And when these payments were made, services were gutted.