CN July 20 2017

Well, Illinois has a budget. But the schools don’t. Chicago Public Schools, for the third year in a row, presented to its principals a budget for their individual schools that’s based on state money that has been promised – sorta – but not truly appropriated. this time it’s $300 million.

The Legislature, as we know, handed the governor a pretty punishing defeat when it passed a budget he didn’t want and then overrode him when he vetoed it. His response? To fire large numbers of his staff, which then triggered secondary resignations from many others.

Our experts this week are WBEZ’s Illinois politics reporter Tony Arnold and Chris Fusco, the Managing Editor of the Sun-Times. Fusco tells us the budget didn’t get resolved because there had finally been a meeting of the minds between the governor and House Speaker Mike Madigan.

“It’s the credit agencies that really forced the State’s hand here, right. I think if it was up to Rauner and Madigan they would have just kept battling it out… Rauner wants to make us an anti-union State, or he’s kind of backed off that rhetoric. Now I think we’re going to kind of go back to that with the people he’s brought in, versus Madigan trying to protect labor rights, but also by doing that potentially exacerbating the pension problem. So we have these two guys and the credit agencies stepped in and said, “Hey, we’re going to lower you to junk.”

But as other state functions begin to blink back to life, money for schools is being held up because of, as always, pensions.

“Rauner has recently been saying he would veto part of the bill that would pertain to Chicago public schools,” explains Arnold. “The old amendatory veto, the AV. He does have the power to do that,  although Chicago public school says what he’s talking about would actually be unconstitutional, so it’s setting itself up for a very long prolonged court fight over…benefits in retirement.”

We’ve heard for years that the Illinois Supreme Court won’t allow cuts, or “diminishment” of pension payments because the Constitution forbids it.  But, says Arnold, “As far as contributions to a pension fund from the state government, well they’ve skipped those pension payments for years and that’s been allowed so far.”

So CPS and other agencies are required to make full pension payments, but they, and the Legislature, aren’t required to put the full amount of money in each year.

Nevertheless, the Legislature did accomplish something that’s been unreachable for decades. It refigured the formula for how Illinois schools are funded in away that allows additional money to flow to schools with higher populations of poor students.

“Governor Rauner I think is okay with most of what the formula is,” Arnold explains. “His Education Secretary has said he’s okay with 90% of it, that 10% is too much and that’s what he would veto out. So, for the most part, if the elected officials, the legislature, even though this thing passed with bare minimum in the House, the formula itself, the proposed formula, the new distribution model to give districts in poor property-wealth areas more state money than what they’ve been getting, because they say the whole systems have been inequitable for the last several years, that yes, this is a good way to do it.”

And having the state pick up Chicago’s share of the teachers’ pensions was part of that legislative deal. Until now, Chicago had to pay its own pension contribution, but Chicagoans, through their taxes, also support the pensions of teachers in every other school district in the state. That became more of an urgent issue because the state legislation also mandated that the City of Chicago must make its annual pension payment each year.

“And all of a sudden,” says Fusco, “after kicking the can down the road for years, we’ve got to make $600-million, $700-million payments into that fund to bring it up to the funding level that state law allows.”

So what does this mean at the school level? If there’s a veto and the veto sticks, there will be a massive hole in the CPS budget again this year. But CPS budgets the number anyway and hopes the check arrives.

“This has been the CPS stance now a few years running,” Fusco asserts. “You know we budget for the money. The money is going to be there. Wait, no, the money is not there. Okay, what do we do to get the money? How do we shuffle it? What do we borrow? Oh wait, now the borrowing rate is up to…depending on whether it’s short-term, long-term, anywhere as high as 6%. I think one CPS borrowing deal hit 9%. Just compare that to what you think about what you’re paying on your mortgage or your car loan. It’s just a real crazy time.”

The Governor has apparently decided that, if he’s going to get re-elected, he’ll have to hew more to the right flank of his party and his supporters. That’s why he’s brought in new staffers from the Illinois Policy Institute and other conservative advocacy groups.

“That’s what the Trump era has delivered us, and Rauner I think maybe stealing a page from that playbook, even if some of those people go against some of the values that he espoused in his first campaign,” Fusco tells us.

Arnold adds that Rauner’s staff had been heavily recruited from people who had formerly worked with Republican Senator Mark Kirk. “And Kirk’s whole political philosophy, when he was in the House he represented Chicago’s northern suburbs, which is not a strong Republican stronghold, but he represented that area for years, and in the Senate, was to be a moderate. To be a moderate Republican is how Republicans win statewide in Illinois.”

“When you have such high turnover, up to 20 people have either been fired or resigned in two weeks, that’s a huge turnover, and its policy people,” Fusco explains. “It’s high-ups in his office, people who advise him on policy, the chief of staff for the entire State government, so it’s noteworthy for that reason alone.”

Finally, we ask Managing Editor Chris Fusco about the recent sale of the Sun-Times to a consortium of local investors and union interests.

“I think we’re all happy about it,” he begins. “There have been concerns expressed about union ownership of the newspaper. There’s been concerns expressed about some of the people that are investors in the paper that have been written about by our investigative reporters … And right now the new management specifically CEO Eisendrath have said all the right things I think. The newsroom is going to be left alone…You know this is historically how, there’s always a push and pull. There’s always going to be calls made to publishers and CEOs about stories. There’s always going to be pressure exerted on those folks. And one thing that I think Jim Kirk and I have both kind of relayed up that chain is – be prepared because you’re going to get the calls. They are going to come. We’ve been doing this a long time…Those decisions are left up to Jim Kirk and myself, and I think as long as we are following the playbook that’s kind of been laid out there’s a bright future for the Sun-Times.”

You can read a full transcript of this show HERE: CN transcript July 20 2017

And you can listen to the show in your earbuds at SoundCloud.

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About Ken

Ken's the host of Chicago Newsroom. A former news director, reporter and radio program host, he's also a past Vice President of the Chicago Headline Club.
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