Feb. 19--The Illinois State Board of Education launched an investigation of Chicago Public Schools' finances Thursday, two weeks after Gov. Bruce Rauner ordered a review of the district's books as part of his call for a state takeover.
The state has asked CPS to turn over a large amount of financial information by the first week of March, including details on the district's cash flow and major contracts. The request was made in a letter sent Thursday to CPS CEO Forrest Claypool and Chicago school board President Frank Clark by ISBE Superintendent Tony Smith and Chairman James Meeks.
The state's request comes after Claypool and leading state Democrats said Rauner's moves to take over the district had no legal basis. The governor has pushed legislation to allow for state takeover of CPS and on Feb. 2 ordered ISBE to identify a potential interim superintendent.
ISBE said CPS was put on "financial watch status" in March 2015. That allows the state to require financial information "relevant to a proper investigation of the district's financial condition and the delivery of appropriate state financial, technical, and consulting services to the district," ISBE said in its letter.
Financial information sought by state officials also includes three-year financial projections and assumptions, monthly payroll amounts and debt schedules that could determine if more state aid or other revenue are needed to pay off debt instead of financing operations.
"As you may be aware, an investigation into a district's financial condition is the first step in a process of determining if conditions exist for 'certification of financial difficulty,'" ISBE said in its letter.
"Our sincere hope is that the forthcoming investigation will identify opportunities for actions to be taken that will improve the financial condition of Chicago Public Schools ... and, most importantly, result in fiscal stability."
A CPS spokeswoman said much of the information requested by the state is already publicly available and repeated the district's position that Rauner has no authority under state law to impose any oversight. She suggested that the governor, by calling for a law to allow CPS to declare bankruptcy, was responsible for the extraordinarily high interest rates the district recently paid to borrow $725 million.
"The last time Governor Rauner offered his financial advice for Chicago Public Schools, Chicago taxpayers were forced to pay even more for our bonds, and we cringe at what his latest venture could cost our children," district spokeswoman Emily Bittner said in a statement.
Rauner's actions are the latest in an effort to use the financial problems of the city's schools as leverage in his battle with Mayor Rahm Emanuel and legislative Democrats to end a stalemate that has pushed the state into its eighth month without a budget.
CPS officials have used the district's budget woes to call for an overhaul of the state's education funding formula. Rauner, in his annual budget address Wednesday, argued that CPS benefits from a "special deal" in which the district receives hundreds of millions more in funding from the state than districts with similar student demographics.
