Aug. 26--We can safely predict that on Wednesday the Chicago Board of Education will approve its budget for the coming school year. It won't be a close vote. It could be unanimous. Board members may intone the familiar warnings about how Chicago Public Schools is on a ruinous course, spending too much, borrowing too much. And then they will vote to ... spend and borrow too much.
We are confident in this prediction because we've seen the same thing happen too many times over the past two decades. What we can't predict is whether any board member will have the moxie to declare: "No. I refuse to play along. This $5.7 billion budget is held together with the flimsiest hope of a nearly $500 million windfall from the financially moribund state government in Springfield. Yes, this budget also is built on another $200 million in 'scoop and toss' borrowing -- turning old debt into a huge repayment burden every year going forward. We ... can't ... do ... this ... again."
On Sunday, Tribune reporter Heather Gillers offered a fascinating history of how CPS worked its way into the financial havoc that threatens to send the system into bankruptcy. She recounted how, in 1979, banks refused to lend any more money to the district. CPS officials were caught siphoning money for school operations from accounts that were supposed to be reserved for paying bond debt. The banks, foreseeing a possibility that they wouldn't be repaid, froze out CPS.
Eventually, that crisis thawed and CPS officials found new fiscal tricks to prop up a school system that chronically has spent more, and promised more in pensions, than it can deliver.
In 1995, the legislature handed control of the schools to Chicago's Mayor Richard M. Daley. Gillers' instructive history lesson:
Instead of imposing lasting fiscal discipline, Illinois lawmakers gave the district a smorgasbord of new ways to hide annual shortfalls. Rather than address underlying structural budget problems, they relaxed the rules governing school spending. CPS got back unfettered access to borrowing and gained the power to divert to other uses the tax dollars earmarked for pensions.
We supported the turnover of school control to the mayor, and we still think it is a good idea. Back then, we said that Gov. Jim Edgar had "tossed Mayor Richard Daley a hand grenade ... (in) the form of a school-reform package for the city that places authority over -- and responsibility for -- the Chicago public school system right where it belongs: squarely in the mayor's lap. The thing about a hand grenade is that whoever wields it has a lot of power, but if it's mishandled, it blows up."
The problem here isn't the law. It granted the mayor and his Chicago Board of Education freedom to maneuver and exercise discretion to best educate 400,000 schoolchildren. The problem is what Chicago officials have done in the two decades since.
The budgetary leeway that lawmakers gave CPS in 1995 was supposed to last only four years -- long enough to finance repairs to dilapidated schools and shore up educational programs. Instead, that financial flexibility remained in place for 20 years, becoming a staple of CPS' budget strategy.
Year after year of risky budget decisions, of spending more than its revenues, of using gimmicks to make it appear that the system was more financially stable than it was ... that's not the fault of the law. That is the fault of the people who ran -- who run -- the system on a "buy now, pay later" basis.
The district has now exhausted its smorgasbord of financial tricks and has graduated to desperate pleadings and dire warnings.
As Gillers reports, debt and pension payments now account for about 20 percent of the CPS budget, four times the percentage in 1996. CPS is expected to drain its reserves below the minimum set by district policy in order to cover those payments this year. Going forward, though, those debt costs metastasize as new debt chases old debt: CPS is juggling borrowed money not just to do what it rightly should do -- repair and build schools -- but to service debt and pay off decade-old interest-rate swap deals.
Without a Springfield bailout, CPS officials warn, they could be forced to borrow even more, driving the system toward ruin. Or, they warn, they'll have to slash spending so deeply that 35 kids will be stacked in a classroom.
On Tuesday, the Civic Federation of Chicago urged the Board of Education to reject the proposed budget because CPS has reached a "precarious and potentially devastating short-term and long-term financial position." Translation: The district's downward spiral quickens.
Also on Tuesday, former schools CEO Paul Vallas told a City Club of Chicago audience that there are savings and efficiencies to be had in many of the ways CPS spends its money.
Wednesday's board vote will be another in a long line that sidesteps responsibility. It will postpone until another day the reckoning that is coming.
Mayor Emanuel, CPS CEO Forrest Claypool, this is your watch. You're playing for history. You'll be remembered years from now for rescuing Chicago's school system or, with the best of intentions, driving it deeper into ruin.
