AM News: Civic Committee Federation Hates CPS Budget

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Civic group gives CPS budget cool OK Sun TImes:  "This is a short-term, adequate plan to close a large deficit and allow public schools to open this year, but it will not prevent further problems with CPS' future budget,'' Msall said... CPS looks to balance budget on shaky foundation, Civic Federation says Crain's:  The group criticized plans to transfer the stabilization fund's entire $190-million kitty to the general fund, characterizing replenishment options as "unreliable" because they depend on the city of Chicago and the state, which also are cash-strapped... CPS Budget Plan Receives a Grim Warning WBEZ:  Chicago Public Schools' $6.4 billion budget plan for the upcoming school year is getting a stern warning from a leading fiscal watchdog... First Public Charter High School in Chicago Suburbs Opens WBEZ:  The first public charter high school in the Chicago suburbs will begin classes on Thursday... Students Lobby To Use Smart Phones In Classrooms Chicagoist:  To bring smart phones to every CPS high school student, the report mentions a proposed outside funding plan... NBA star Dwayne Wade Gives Back to Chicago Kids WBEZ:  NBA star Dwayne Wade talks about life before the NBA, and how he tries to give something back to Chicago youth... Fritchey wants surplus TIF funds to go to city's schools Sun Times:  Fritchey said Oak Forest and Chicago Heights officials have in the past chosen to return unallocated TIF funds.

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  • Just so everyone knows I am not Anonymous, but I have no problem that my comment from Catalyst was cross posted. Now to the Civic Federation's report.

    Here is what is good about the Civic Federation analysis of the CPS budget. It is critical of the CPS public hearing process for the budget. It raises the question of what happens when the CPS's teachers pension payment holiday ends. That issue really was not discussed in the CPS FY 2011 budget.

    Here is what is bad in the analysis: (1) It opposes even the smallest property tax increase which apparently the PTELL cap would allow [0.1%] and supports CPS in not raising its rate at all even though the Federation admits in a report that the City of Chicago has among the lowest property tax rates in Cook County (Civic Federation (2010, August 23) " Effective Property Tax Rates 1999-2008. Selected Municipalities in Northeastern Illinois."); (2) the Civic Federation mentions in passing the possible release of excess TIF funds to CPS but does not indicate that it supports requiring that the City release those funds; (3) The Civic Federation's proposal for the pension fund problem is for CPS to have the same number of votes on the pension fund board as current employees and retirees do and to increase significantly teacher's contributions to the fund; (4) The Federation basically opposed CPS using the reserve fund to limit layoffs.

    I basically support the Board's proposal to utilize all reserve funds in order to limit any additional layoffs or class size increases. I recognize that if the State is not able to keep payments flowing to CPS during FY 2011, CPS will be required to make mid-year budget adjustments including possible program changes with associated layoffs. I agree with the Civic Federation and I also believe that CPS should not utilize any additional short term borrowing against any expected State payments.

    Rod Estvan

  • In reply to Rodestvan:

    I'd kind of like to know what the Civic Federation thinks about the Board's derivatives problem.

  • In reply to Rodestvan:

    regarding the derivatives, as far as I can tell the first one matures in 2031 according to the last annual report. So they have some time to come back in the money, since the CPS is a loser on all the deals counter party risk of failure does not matter. But if interest rates stay this low up to 2031 well CPS is out some money. Should CPS be doing this type of off set trading, I think not.

    Rod Estvan

  • In reply to Rodestvan:

    Rod, what are your thoughts about this? If the state pension funds go bust, the state has no obligation to step in to pay the benefits! Article 13, Section 5 of the Illinois Constitution states, "Membership in any pension or retirement system of the state, any unit of local government or school district...shall be an enforceable contractual relationship, the benefits of which shall not be diminished." However, neither the constitution nor the law says the state is a GUARANTOR of that obligation! The state can become a GUARANTOR only under section 212-403 of the Illinois Pension Code. That provision states that if a state pension fund runs out of assets "(a)ny pension payable under any law...shall not be construted to be a legal obligation or debt of the State... but shall be held to be solely an obligation of such pension fund, unless otherwise specifically provided in the law creating such fund." The "obligation of the state" provision does not guarantee that the state will step in and pay the funds if the pension funds run out of money! If pension funds run out of cash, public workers face the same sort of uncertainties that most workers in the private sector do!

  • In reply to Rodestvan:

    On Sunday, Rep. John Fritchey (D-11th), joined by students and representatives from Raise Your Hand and CTU, held a press conference where he announced a plan to overhaul TIFs, using a three-part approach:

    1. Require an Annual Reimbursement of Surplus TIF Funds
    2. Exempt the Chicago Board of Education from any Future TIF Districts
    3. Direct the Auditor General to Perform a Comprehensive Audit of TIF Districts

  • In reply to Rodestvan:

    daley on the defensive on TIF and other budget-related issues, by the chicago news cooperative:

    http://www.chicagonewscoop.org/daley-pushing-back-against-tif-critics/

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