The CPS Board was very busy yesterday. They passed a $5.4 billion operating budget, along with  a basket-ful of big-ticket borrowing. There was about a billion for capital projects like new schools and additions, air conditioning and internet upgrades and lots more. Then there was the billion-and-a-half for a short-term loan just to get the system’s cash-flow in order.

Juan Perez, Jr watches and reports on all of this for the Chicago Tribune.

He tells us that the budget has lots of problems. First, there’s the $215 million that the State has promised, and the Board has budgeted to spend, although it isn’t coming unless the Governor agrees that there’s been “pension reform.” But nobody really knows what that means.

“I asked different sets of people about what this grand bargain on pension reform might entail and I get three different answers sometimes,” Perez explains. You know the rules of the game haven’t really been established with enough clarity to satisfy me at this point, or I think a lot of other people. I think different folks are convinced of what the idea might be. Would it be Cullerton’s consideration idea? Would it be getting downstate teachers to pay more into TRS? But there’s so many factors here  and this is an election year not to mention. So what is going to satisfy the Governor? Ultimately it’s got to get his signature…”

And, he says, time is really getting short. “But there needs to be an answer here soon, otherwise you know the district is in all likelihood going to have to come through with some serious level of cuts. And let’s be honest here, this operating budget has already relied on a lot of cuts to schools that we have no reason to believe are fake in any way. I mean schools are expressing a lot of pain coming from this.”

But that’s not all.  CPS baked about another $35 million into this cake that has to come from concessions in the CTU contract, and nobody seems to know how that’ll go, either.

“Is there a deal in sight?,” he wonders. “I don’t know. I think Karen Lewis recently expressed some optimism to me that talks were going pretty well, but that the framework of this deal that CPS offered in late January wasn’t going to fly with members…but the district has sought to make its position very clear that there is not a lot of fiscal flexibility as far as whatever its contract offer might be. So you know, that sounds like an impasse to me, potentially.”

The big question is whether the Union is willing to strike, or could sustain a lengthy one. “If they want a strike what is it that they’re going to walk out on? How are they going to justify it and then how are they going to bring the members back in, too? Especially if the school district and the Mayor’s office are going to continue asserting that the financial framework of what they tried offering back then is going to have to stay pretty rigid.”

But beyond all that, says Perez, that short-term 1.5 billion dollar loan is so huge that it’ll cost about $35 million in interest.

“There is no way this budget works. There is not enough cash on hand to pay bills as they come in without this line of credit – without 1.555 billion dollars in short-term debt. It’s akin to a payday loan,” he explains.

“The basis of the problem is the reserves have been all but completely exhausted. That’s why the Board erected this financial policy back in 2008,” he tells us. “They had wanted this on hand so they could avoid these sort of peaks and valleys as best they could. Those days are over.”

However, things really are different this year. There are permanent funding sources in place, in the form of new dedicated tax levies for pensions and physical plant improvements. And even in Springfield, there are hints of actual commitments.

“…there are some differences in the dynamics, I suppose,” asserts Perez.”You actually have legislation that’s passed. You actually have commitments from legislative leaders saying we’re going to get this done. But remember, we’re banking on Springfield. We’re banking on the Capitol. We’re banking on a Capitol that’s in some serious dysfunction right now.”

And the legislators do have a powerful incentive.  “…they all want to get re-elected. I mean we’re presuming that they all want to get re-elected. So things are reaching a point potentially where there’s enough pressure that they know that if this doesn’t come through there’s going to be a real problem.”

We also discuss the new CPS policy that co-mingles funding for special education students with the general education budgets. Some observers are saying that the policy forces principals to choose between the two populations, but principals are told they must satisfy the special-ed needs first. Perez says it puts principals in a difficult position with the school’s parents.

“The question is whether the slice of the pie that I’ve been given now to pay for this is A) substantial enough to cover all the needs of my special education students, B) whether I’m going to have to dip into other funds that are meant for other purposes to help make that work before taking care of my general education population, before taking care of the rest of my students. And so when you’re sitting here in the school office with your ledger trying to make the numbers work, oftentimes that leaves principals with a very difficult decision, and I think that’s what a lot of the pushback that you’re seeing from the community right now, like how is this actually going to work? And what ultimately happens, some folks are saying, is that it creates, or has at least the potential to create, a schism within a school community, where the needs of one population are pitted against the needs of another population.”

You can read a full transcript of this show in Word format HERE:CN transcript Aug 25 2016