Chicago schools to take $400M advance from revolving credit, Even Amid Possible Strike!

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The Chicago Board of Education tapped $400 million from its short-term revolving credit agreements with Bank of America and PNC Bank! Read More At Crains Chicago.

CHICAGO (WLS) — The potential of a teachers strike is moving closer to reality in Chicago.

Chicago Public Schools and the teachers union are reaching a stalemate in negotiations.

Chicago teachers are no strangers to strikes: The last three contracts with Chicago Public Schools landed after the teachers walked off the job.

“To force our hand to take a strike vote is a very cruel and mean joke,” CTU President Stacy Davis Gates said.

Davis Gates claims CPS CEO Pedro Martinez is deliberately stalling.

“He is being a bully,” Davis Gates said.

Martinez and his team deny they are stalling.

“There is all this rhetoric and accusations that are not based on truth; we have more agreements today in contract than last two contracts,” Martinez said.

Both sides have agreed to take the next step, which is a fact-finding: a path to a potential strike. Read More At ABC 7 Chicago.

New CPS school board needs fiscal discipline, creative problem-solving

There were hopeful notes at the swearing-in of 20 new board members, half of them elected. Now the hard work begins.

We don’t envy the difficult job facing Chicago’s new Board of Education members, 20 of whom were sworn in on Wednesday.

But we’re rooting for the board to succeed, especially in these tumultuous times. And the swearing-in at Chicago Public Schools headquarters provided plenty of hopeful notes, which we’re taking as a positive sign that members are eager to tackle the task of steering CPS’ financial and educational ship, and will be willing to make the hard and unpopular choices that will inevitably be needed.

That’s abundantly clear from a new report from the Civic Federation, which points out the most pressing fiscal and operational problems in CPS — among them, thousands of new hires largely paid for with federal pandemic funding that has now run out, aging and underused school buildings, crippling debt costs — as well as potential solutions. Meanwhile, CPS and the Chicago Teachers Union are still negotiating a new labor agreement that could add to the yearly $500 million deficit that CPS is already in line for. Read More At Chicago Sun-Times.

How can Chicago Public Schools pay for a new teachers contract?

As Chicago Public Schools continues contract talks with its teachers union, a pressing question looms: How will the district pay for a new contract — and rein in ballooning budget deficits?

Money from local property taxes, the state, and the federal government fuel the city’s public schools. As the feds’ contribution shrinks with COVID aid running out and state proposals to boost education spending remain modest, Chicago is increasingly looking into its own pockets to find more money.

In recent weeks, the Chicago Teachers Union has repeatedly spoken of a three-pronged solution as it keeps pushing CPS to agree to more of its proposals:

Dip into the district’s reserves.

Bank on an influx of dollars freed up as special taxing districts that siphon property tax revenue to spur development in a specific area expire in the coming years.

Keep lobbying the state to chip in more.

District CEO Pedro Martinez’ administration has said the reserves idea is untenable, a sentiment some school finance experts echo.

“There is no mythical pot of gold, so I hope we can put this to bed,” district CEO Pedro Martinez said at a Monday news conference.

But Martinez agrees the potential new tax revenue expected to flow to the district as so-called tax increment financing districts, or TIFs, end is a promising piece of the district’s fiscal stability puzzle. CPS is projected to see hundreds of millions in additional property tax revenue in the coming years as TIFs expire. But similar to state funding that is ramping up over time, the added TIF boost might not start really moving the needle until after the four years of the teachers contract the district is now negotiating.

Union officials have pointed out that key sticking points at the bargaining table, such as giving teachers more latitude to select their own curriculums, don’t necessarily cost money. But the two sides have yet to reach agreements on educator pay and staffing — the costliest items — as talks enter their eighth month. The CTU has more recently come close to the district’s pay offer, asking for 4% to 5% cost-of-living raises in each contract year.

District officials have held up CPS’ financial limitations to argue they must hold the line in the contentious talks.

The Civic Federation, a nonpartisan fiscal watchdog agency based in Illinois, released a new analysis this week cautioning the new partially elected school board, which takes office this week, of the district’s precarious financial outlook.

The district is at a “critical financial juncture,” the report notes, with growing deficits and costs, declining enrollment, aging and underused buildings, and more than $9 billion in debt.

The report argues for “right-sizing” the district’s $10 billion budget, which added about 7,000 positions largely with one-time federal pandemic relief as enrollment shrank.

Marguerite Roza of the Edunomics Lab at Georgetown University says CPS is not alone in facing budgetary and demographic headwinds, with the end of federal COVID aid, rising costs, and shrinking enrollment. Many are bracing for belt-tightening in the coming years, with little likelihood of extra help from the incoming Trump administration.

“What makes Chicago unique is this push to up the spending now, when the federal relief funds are already gone,” she said.

But Mayor Brandon Johnson and the CTU have been adamantly opposed to cuts they say will hurt the district’s students, and Martinez has shied away from broaching the topic, saying he wants to protect investments that helped students rebound from COVID’s academic toll.

Can CPS dip into its reserves?

In recent weeks, the union has increasingly pointed to a fund balance listed at more than $1.1 billion, which at 10% of the district’s budget is still lower than the 15% called for in district policy.

It’s an amount that has increased in recent years after dropping precariously in the late 2010s. The district has touted that healthier balance in front of credit agencies as it has sought to improve its credit rating and thus lower its runaway borrowing costs. In a memo district officials wrote to the mayor’s office last summer, they noted that CPS remains one of the largest junk bond issuers in the United States, which has meant steep borrowing price tags.

Pavlyn Jankov, a CTU researcher, acknowledges at least some of the reserves are tied up in day-to-day district expenditures because money from property taxes and the state comes in twice a year while payroll and other expenses are ongoing. Still, “it means the district has more flexibility to make financial decisions,” Jankov said.

He said other districts, such as Minneapolis, are dipping into their reserves to soften the financial blow from the expiration of COVID relief funds and ward off some cuts.

Read More AT Chalkbeat Chicago.

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