Emanuel’s CPS budget solution raises more questions than answers

Chicago teachers and allies march around the Loop towards a rally at Daley Plaza on February 4, 2016.

Photo by Max Herman

Chicago teachers and allies march around the Loop towards a rally at Daley Plaza on February 4, 2016.

One key to the 11th-hour settlement in negotiations with the Chicago Teachers Union on Monday night was Mayor Rahm Emanuel’s decision to declare a $175 million surplus in the city’s tax increment funds – $88 million of it to help plug Chicago Public Schools’ budget gap.  But his decision raised more questions than it answered.

The first question is why Emanuel waited until the last minute to offer the funding.  For months he had resisted demands by CTU, parent and community groups – and aldermen and legislators – to devote more TIF surplus to schools.  It appears to have taken the pressure of a strike deadline by teachers to get him to move.

A larger question is what the city means when it says that nearly all the $1.4 billion in accumulated TIF funds is “committed” and thus unavailable for surplusing. Until this week, at least, that included projects like a second Near North selective enrollment high school – projected to cost $60 million, and originally to be named for President Obama – which Emanuel shelved in order to finance his TIF surplus.

That was a win for parent groups like Raise Your Hand, which had argued that CPS can’t afford a new selective high school at a time when it’s cutting $150 million from neighborhood schools and losing enrollment.  But the project was also “committed” only in the most hypothetical terms ­– planners hadn’t even found a site for the new school.

Declaring those funds to be “committed” or “surplus” was completely up to Emanuel, in consultation with the local alderman.

An ordinance to increase the TIF surplus going to CPS, introduced by Ald. George Cardenas (12th) and Ald. Susan Sadlowski Garza (10th) in July, would have tightened the definition of committed or encumbered funds, limiting it to funds specifically allocated to contractual obligations, not including anticipated project costs or other “potential future payments.”  The City Council’s Finance Committee has yet to vote on the proposed ordinance.

A bill proposed by State Rep. Barbara Flynn Currie (D-25th) last winter would have done the same thing.  It’s stuck in the legislature’s rules committee.

Emanuel and others argue that TIF funds offer only a short-term solution but, without a full accounting of contractual obligations, it’s not clear what that means.  “They say it’s a one-time fix, but this money is collected every year,” said Wendy Katten of Raise Your Hand.  TIF took in $461 million last year – and collections will increase in coming years as property tax hikes take effect.

Emanuel also argues that most TIF spending is for schools, parks and libraries. But those are the same taxing districts from which TIF funds are diverted.  TIF “is not a very equitable way to do capital spending,” said Katten, since TIF districts in wealthy areas accumulate much larger fund balances.

For Katten, one big question is whether the additional funds will be used to restore cuts in schools.  “There’ve been a lot of brutal cuts this year, and it makes it really hard for parents to feel confidence in the school system,” she said.

There’s another huge question: What about next year?  A state funding package to plug CPS’ budget gap – much of it awaiting action by the General Assembly later this year – is good for this year only.  The school system is looking at half-billion-dollar deficits in future years, said Bobby Otter of the Center for Tax and Budget Accountability.

Bills to adjust the state’s school funding formula would help. A measure to ensure adequate funding for each district sponsored by State Sen. Kimberly Lightford (D-4th) and passed by the Senate could bring CPS an additional $700 million or more, according to CTBA. But it faces a tough climb, in part because some districts would lose money.

Ultimately, fixing Chicago’s schools is going to require fixing the state’s school funding system, and that’s going to take more revenue.  Otter estimates that if Illinois met its constitutional mandate to act as the primary source of K-12 school funding, CPS would get as much as $1.5 billion more from the state.

But so far a real solution seems to be beyond the capacity of our political leaders. A final question: Can popular pressure change that?