CHICAGO PUBLIC SCHOOLS FINANCES WORSENING
Our Local Taxpayers Could Be On The Hook For Bailout
Despite some school closures and administrative cuts, Chicago Public Schools are in “a deepening and unsustainable financial hole” a just released report from Chicago’s Civic Federation stated. The cuts which Chicago touts were over $100 Million is less than 2% of their projected $6.6 Billion school budget.
Similar to financial strategies used in Detroit, the Chicago School System has been using pension holidays, raiding reserve funds and borrowing money to stay afloat. Over the last four years, the district’s long-term bonded debt has jumped 38%, or $1.6 Billion.
Due to “pension holidays” CPS pension funding has dropped from 81.2% in fiscal year 2003 to 54.5% in fiscal year 2012. This year the district is being required to contribute an additional $404 Million to the pension fund — money it doesn’t have.
CPS faces a deficit of nearly $1 Billion this year. This deficit is growing despite the fact that it was reported earlier this year that the Chicago District has been receiving over $800 Million annually from the State — this is over and above what they should have received based on the number of and the needs of their students.
Financial warnings have been given to the District for years and have gone unheeded. Compounding the problem this year was the approval of a teacher’s contract that, in addition to other benefits, reportedly gave teachers a three-year contract that included a 7% increase in base salary with no increase in health insurance contributions at a first-year cost of over $75 Million!
Taxpayers need to be concerned as Chicago will be looking to the State of Illinois to once again bail them out at the expense of our local school districts.
Interesting to note — Chicago still has one of the, if not THE, lowest property taxes in the State. For example, Governor Quinn’s home in Chicago is valued at $290,000 and his total annual property taxes are $4,052. That same home, if located in Rockford, would have a tax bill of over $11,000. Also important to point out is that the city of Chicago has NEVER had a school referendum, but instead has relied on Springfield to make up the shortfall.
A few last thoughts on Chicago Public Schools, but also on all governmental bodies that are deficit spending.
I can see the possible need to short-term deficit spend during an economic crisis, but what possible rationale can be made to deficit spend during normal economic times?
Where do these political leaders think the money will come from if the revenues are not there during normal economic times?
The fact that the leaders who put Detroit into its present position, those who put Chicago in it’s present position and the entire State of Illinois in its present position can walk away from the mess they have created and be rewarded with lifetime massive pensions is wrong and should be illegal.
If these same actions were taken by leaders in the private sector, they would be criminally charged and personally sued. Maybe that’s what we need to do in government to get them to act responsibly.