May 07--Despite Chicago Public Schools' financial straits, a state investigation concluded the district's books don't warrant an intervention from Springfield.
The Illinois State Board of Education's finding that CPS is not in "financial difficulty" as defined by state law represents a blow to Gov. Bruce Rauner's efforts to give the state greater control over district finances.
For now, ISBE has signaled it will simply continue to keep an eye on CPS.
ISBE launched its investigation of CPS finances in February after Rauner ordered a review of the district's books as part of his call for a state takeover of the troubled system. The Illinois attorney general's office subsequently concluded Illinois has limited authority over CPS' finances.
Materials prepared for ISBE's monthly meeting on Wednesday state that CPS is planning to cut $120 million in its coming budget year, and that the district continues to face massive and growing payments to fund teacher pensions.
ISBE officials said the $120 million in cuts means CPS can stave off a "negative operational budget" until the district's 2019 fiscal year. Without the cuts, ISBE said CPS would have no cash balance to pay its bills as early as its 2018 fiscal year.
But CPS doesn't at this time meet any of five criteria that would prompt the system to fall into "financial difficulty," ISBE found.
"It's clear in our analysis CPS has financial challenges and a spending problem," ISBE spokeswoman Laine Evans said in a statement. "However, at this time they do not meet the criteria for certification of financial difficulty, as defined per statute. ISBE will continue to monitor the situation and the district's finances."
CPS spokeswoman Emily Bittner said in a statement that ISBE's "decision demonstrates that Gov. Rauner's attempts to drive CPS into bankruptcy are misguided and wrong."
The district faces a pension bill of about $675 million next month. CPS officials have said the district can make the pension payment only with the help of hundreds of millions of dollars worth of short-term borrowing.
Even after borrowing money through a strategy that resembles a payday loan, the district projects it would end its current budget year with about $24 million in cash. That amounts to less than two days worth of operating expenses.
CPS CEO Forrest Claypool has said the district needs a new line of credit to remain solvent in the coming budget year and has sought to pressure Springfield lawmakers -- so far without success -- to overhaul the state's current school funding formula.
