CPS needs $596M, not $129M, to finish year, top mayoral aide says

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The Chicago Public Schools actually need $596 million to keep schools open the rest of the school year, and not just the $129 million officials have publicly discussed, a top aide to Mayor Rahm Emanuel said Tuesday.

The larger figure takes into account delays in receiving block grants from the state, according to Carole Brown, Emanuel’s chief City Hall financial officer.

Brown said all options ares on the table to find the money needed to stave off an early closing of schools that CPS CEO Forrest Claypool has warned might be needed but that Emanuel has ruled out to preserve the longer school year that took a teachers’ strike to achieve.

Brown wouldn’t even rule out another tax increase — in addition to the $250 million already imposed for teacher pensions and the $45 million for school construction.

But she said that would not solve the need for an immediate cash infusion.

“It’s a really difficult problem we’re trying to solve and a difficult needle we’re trying to thread because ultimately the responsibility of funding CPS is the state’s, it’s not the city’s,” Brown said.

She said other possibilities include: taking a “bridge” loan from tax-increment-financing districts that might never be repaid; another round of borrowing; more cuts of school support staff; delayed payments to CPS vendors; and a request to the Chicago Teachers Pension Fund to delay all or part $721 million payment that’s due June 30.

A 60-day delay on the pension payment would solve some of the cash-flow issues since tax revenue typically rolls in by August.

Brown said “any solution that the city supports and that CPS puts forth will be a solution that does not put city finances in peril.”

Top mayoral aides had been scheduled to brief aldermen behind closed doors Tuesday on Emanuel’s plan to provide a temporary financial rescue for CPS. But the briefings were postponed for a second straight week to allow more time to find a solution.

Brown said the holdup is that the problem is much bigger than the $215 million in state pension help that Gov. Bruce Rauner vetoed — money that Claypool had counted on in CPS’ budget.

“We’re not ready because it’s a very complex, difficult problem,” Brown said. “They’ve got about $129 million left of the $215 million that they need to identify alternatives for. They also are dealing with a delay in block grants…of approximately $467 million. That is also an issue because they had budgeted that they would receive their fiscal year 2017 block grant in 2017.

“Those are the two issues we’re trying to solve by the end of the year. We’re not expecting to present a solution that has the city coming up with $600 million in new revenue for CPS for fiscal year 2017,” Brown said. “The solution that we’re looking at may or may not include any funding help from the city. Everything is on the table.

CPS is in a bind for a second straight year after balancing its budget by counting on state money that it didn’t have and that didn’t come through because of the budget standoff in Springfield and because the state is so far behind in paying its bills.

On top of that, CPS had counted this year on getting the $215 million in pension help that Rauner said was contingent on station pension reform that has not happened.

When Rauner vetoed the teacher pension bill, Claypool ordered more mid-year budget cuts and filed a lawsuit accusing the state of distributing school aid in a way the discriminates against districts like Chicago that serve predominantly poor and minority students.

On the same day that a Cook County judge dismissed the lawsuit, Emanuel said that, despite Claypool’s earlier warning that classes might have to end as much as three weeks early, he would find a way to keep schools open the rest of the year.

The Sun-Times reported Monday that the mayor opposed Claypool’s lawsuit and didn’t know of his CEO’s threats to cut school days until after they’d been made public, increasing the tensions between the two men, who’ve been friends for 30 years.

“The school year ends June 21,” Brown said. “The fiscal year ends June 30. They will be in budget discussions for fiscal year ’18 in June. So our hope is literally, in the next few days, we will have something to present to the aldermen — because we’re gonna need to.”


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