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AM News: Board Approves "Nuclear" Budget

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Huberman

gets OK to lay off teachers, boost class sizes Tribune:Firing about 2,700 teachers would save the school district $187
million..The district could save about $135 million if it could
forgo the four percent raises due teachers and other union labor this
year... School

Board Unanimously Approves Huberman Plan NBC Chicago:  Lewis

and her constituents are upset because the board's plan means that
Huberman has the authority to lay off more than 2,700 teachers -- some
of them tenured -- from the Chicago Public School system... School Board gives OK to raise class sizes to 35 Sun Times:  In a dramatic emergency meeting, Chicago School Board members today
unanimously gave Schools CEO Ron Huberman the green light to raise class
sizes to up to 35 students -- a move that would trigger thousands of
layoffs -- to plug a $427 million deficit.

Filed under: Daily News Roundup

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  • I think Ms. Rossi did a better job on reporting what took place at this meeting than did the Tribune. I do not know if the 35 student classroom realy is the nuclear option, because the cut of 2,700 teachers is about 10.3% of the CPS FY2010 teaching force (26,115 CPS 2010 budget page 68) and this is a lot less of a cut than many other school districts are carrying out in FY 2011.

    Ms. Rossi accurately reported what Mr. Huberman said in relation to the $800 million in short term borrowing using what are called tax anticipation warrants. But I think her article and other stories are confusing to the public because they make it appear that CPS is borrowing against expected revenue owed them from the State of Illinois. They are not doing that, they are borrowing against property tax revenues from the 2009 and 2010 tax levy.

    The $800 million is approximately 42.9% of the money CPS expects to realize from the 2009 levy. CPS would not be able to get a reasonable interest rate borrowing against expected state aid payments, because effectively Illinois is bankrupt.

    The other extremely interesting aspect of this story was Ms. Rossi's line that discusses the CPS "reserve fund" which unnamed CPS officials told Ms Rossi was less than $50 million. I do not want to make this overly complex, but this fund is actually called the unreserved, designated fund balance or stabilization fund which is a part of the General Fund. These are different funds than those for debt service, which CPS cannot touch for operating purposes because of general obligation bonds.

    According to the FY2010 budget CPS expected to have a stabilization fund of only $181.2 million. So if the stabilization fund was anywhere near $50 million It would be impressive cash flow management given the failure of the State to pay CPS over $400 million in categorical entitlements and other lines. If I recall correctly Mr. Huberman did say that CPS would not be able to make the next payroll and pay money owed vendors without this borrowing plan.

    The reason Mr. Bobbins made his statement that Ms Rossi noted was he knows history, and I also know this history since my MA Thesis done at Saint Xavier was on the 1979 fiscal collapse and reorganization of CPS. The primary conduit of this collapse were tax warrants that were called in by Chicago banks resulting in CPS not being able to pay staff and the creation of the School Finance Authority run by Mr. Martin J. Koldyke who also created AUSL. George Schmidt and Substance did some of the best journalism on this crisis that I know of and he is appropriately cited in my MA Thesis.

    The issue of the 4% teacher salary increase I believe equates to somewhere around $162.8 million (see CPS FY 2010 budget page 7), the savings of the 35 student classroom based on a March power point presentation by CPS are no more than $160 million. Ms. Rossi in her article did not discuss the numerous other options CPS has to offset this salary increase, for example a property tax increase which CPS could increase by 4.1% for FY2011. A reduction in assessment and testing that cost in FY 2010 $58.9 million (see page 20 of FY 2010 budget) which CTU's President elect did discuss, cutting professional services and tuition which in FY 2010 was $689.3 million also mentioned by CTU representatives at the Board meeting.

    Mr. Huberman's estimate of the operating deficit for FY 2011 was $427 million as Ms. Rossi correctly notes. But honestly it was only Norm Bobbins who attempted to explain to the public that neither the 35 student classroom nor taking away the 4% salary increase fills this hole which would remain around $267 million. The outline of the budget scenario given by Mr. Huberman presumes the State will pay CPS what it is owed for FY 2010 in FY 2011. I do not know if that will happen given the situation with the State.

    This much I do know, today according to Illinois State Comptroller's office the Common School Fund (0412) had only $5,115,295 in it (you can see this by going to http://www.wh1.ioc.state.il.us/quicktake/cash-balance.cfm?cbfund=0412&CFID=5508034&CFTOKEN=19603816.) This is less than 12.5% of what the State owes CPS alone. Regardless of the 35 student class room, which I oppose, or giving up the 4% salary increase the CPS is still in the hole. CPS clearly needs to do additional cutting and increasing of taxes, summer bridge should have been shut down and I have no idea why it was not because based on Consortium analysis it has very limited effectiveness.

    Taxes need to be raised and the Mayor is telling the CPS loudly not to do so. Really this is one hell of a mess, I do not envy the situation of Mr. Huberman and I do not envy the new leadership of the CTU.

    I do not have great optimism that CPS will be getting its State money any time too soon. Comptroller Dan Hynes states on his website: "What is clear is that as bad as our budget situation has been recently, it is only getting worse. We cannot pay our bills, and there is less money coming in than anticipated. The state of Illinois continues to be in a major fiscal crisis, and the situation continues to deteriorate."

    Some of you may have noticed, I am kind of quiet on the TIF issue. That is because I have seen the numbers on tax dollars lost to CPS from TIFs, but I have never seen the capital dollars gained from TIFs for school construction documented. I can give you one example I know of. In 2006 the City Council passed an ordinance for the use of TIF revenue notes for CPS construction for $800 million in relation to the Modern Schools Across Chicago Program. This program helped 18 schools with capital projects in 18 different TIF districts that I know of.

    So I think that those critical of TIFs who see it as a potential way to offset some of the CPS budget cuts need to look carefully not just at tax dollars lost, but also at CPS capital projects paid for with TIF dollars. From the numbers I have seen tossed around in the Reader my guess is CPS may still be losing money on the TIF deals even with the capital projects. But this needs to be quantified.

    Then we need to know exactly what type of action would be required to unwind the TIFs and restore funding to CPS. How long would this take, even if it was agreed to. This is important because really the money would need to be realized fast to be of any use in the current crisis.

    Rod Estvan

  • In reply to Rodestvan:

    Rod, I just can't thank you enough for always filling in the blanks for me. Your analyses always seem to pop up when I most need clarification or deeper knowledge of a subject. Please don't stop keeping us informed.

  • In reply to Rodestvan:

    Thanks Rod.
    If CPS doesn't balance their budget, they can't open in September.

    Huberman's plan to borrow, plus cut teachers still doesn't cover the hole. Is this the plan... to tell the public that he still need more money which means cutting more teachers. (he won't cuts his PM team).
    Which will put them in a deeper hole since less taxes are being paid and more people lose their homes. The trickle down effect will get worse.

    Or will Daley sell off CPS to private industry and make money for the city?

  • In reply to ladyfair:

    What private industry would want it? If CPS cannot make the books even appear to kind of sort of balance, how would private industry? NCLB would affect them too so doing some kind of one room schoolhouse system as a cost savings method would be out of the question.

    True, there are EMOs but largely these operate individual schools where they can concentrate on educating the more motivated and ambitious students from poor families. Agreeing to manage an entire system of default schools for students across the entire spectrum of ability and interest? I doubt it. I think you'd see widescale vouchers first.

  • In reply to ladyfair:

    a newly minted teacher tells about her student teaching experience and her desire to help -- wherever she's needed - at WBEZ

    http://www.chicagopublicradio.org/content.aspx?audioID=42626

  • In reply to ladyfair:

    joravsky slammed the daily editorial pages for buying into the notion that huberman has made substantial cuts at the central office

    http://www.chicagoreader.com/TheBlog/archives/2010/06/16/what-cuts-did-huberman-actually-make

    beachwood reporter's steve rhodes notes that the editorial pages are missing the boat and that journalists like WTTW's elizabeth bracket seem unprepared to dig into the huberman claims

    http://www.beachwoodreporter.com/column/the_friday_papers_212.php

  • In reply to ladyfair:

    whet moser at the reader weighs in on the gap between what ben joravsky has found and what the trib and sun times are editorializing. he wonders if the dailies are reading their colleagues' (competitors') coverage

    http://www.chicagoreader.com/TheBlog/archives/2010/06/18/elementary-math

  • Good question!

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