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Chicago aldermen and City Hall officials suggested the city could withhold other funding for Chicago Public Schools if the new school board doesn’t reimburse the city $175 million to cover a portion of a pension payment for some school staff.
Ald. Jason Ervin, who represents the West Side and is chair of the powerful committee on budget and government operations, said that while CPS has no legal obligation to reimburse the city, City Council also has no obligation to provide the school district with funding for school construction projects or waive water and sewer fees, as it currently does.
Those and other entanglements between the city government and the school system were laid out in a 2023 report required under the state legislation that paved the way for Chicago’s transition away from mayoral control to a fully elected school board in 2027.
The scene highlighted the complexity of the shift in governance, but also foreshadowed the political conflicts that could play out in the years to come.
“There’s an old African proverb that says: When the elephants fight, the ground gets trampled,” Ervin told school board members at the second of two public hearings Friday. “We share constituencies. If one loses at the expense of another, we’re both losers in that calculation.”
The city must close its books for 2024 by March 30 and officials have said they’ve already made a full payment to the municipal pension fund. If the Chicago Board of Education does not come through with a $175 million reimbursement, the city risks ending the year in the red. Facing that prospect, the city’s chief procurement officer has asked vendors who do business with the city for a 3% discount on services, WGN reported.
A letter urging the district to pay up was circulated by Ervin and Ald. Jeanette Taylor, chair of City Council’s committee on education and child development Thursday and had been signed by 28 aldermen as of Friday.
Ald. Byron Sigcho-Lopez, an ally of Mayor Brandon Johnson, told school board members Friday that “every dollar spent on this pension payment is coming out of money for public safety, infrastructure, public health, and sanitation.”
Jill Jaworski, the city’s chief financial officer and a parent of a CPS high school student, said aldermen have asked her about canceling some or all of the roughly $319 million in city financing for ongoing school capital projects.
“They feel the commitment was made to make this payment, and if it is not made, they are concerned about why we continue to support CPS in the manner that we do,” Jaworski said.
Yesenia Lopez, one of the elected school board members, said it’s important for the school board to “continue those relationships and build trust” with the City Council as the two become separate government entities.
“What does this set precedent for moving forward? What in the future is the city going to be asking us to also help contribute to — the many items that the alderman stated that the city is already contributing to,” Lopez said.
City Hall suggests CPS refinance debt
The budget amendment that the new 21-member, partially-elected school board is scheduled to vote on next Thursday would add $139 million in unexpected revenue from the city in surplus dollars from special taxing districts. But it includes three possible ways to spend the new money: Reimburse the city, cover the costs of a new Chicago Teachers Union contract, or cover the potential costs of the principals’ first union contract. Both labor contracts are still being negotiated.
All of those expenditures would cost more than $139 million, but CPS CEO Pedro Martinez said cuts, furloughs, and layoffs are “off the table.”
The amendment requires a two-thirds vote to pass, meaning if seven school board members were to vote no, the amendment would fail.
As a potential solution to afford both a reimbursement to the city and looming labor costs, the Johnson administration has been pushing CPS to take out a short-term loan or refinance existing debt, which it floated earlier this week.
Jaworski laid out the refinancing option to school board members Friday, but acknowledged it would be “a bridge scenario.” She said her team’s analysis indicated a refinancing could free up about $250 million immediately, but cost the district about $50 million in interest down the road.
Elected board member Therese Boyle, who represents the far south side, raised concerns that state lawmakers would frown upon CPS doing any refinancing or borrowing. She noted that earlier this week state Rep. Curtis Tarver (D-Chicago) filed a bill to reinstate financial oversight of Chicago schools.
“We already have so much debt, and our debt payment every year is so much of our budget,” Boyle said. “What kind of a message does this send to the state? That bill that was filed last week saying they want to reinstate the School Finance Authority. Does it look like we can not handle our budget ourselves, and we’re just borrowing, borrowing?”
CPS’ Chief Financial Officer Miroslava Mejia Krug said the school district would need to wait and see what the market conditions are if it were to try refinancing.
As the nearly four-hour hearing wound to a close, appointed board member Michilla Blaise urged everyone to work together to find a solution.
“It’s way political, I guess, because of history, for lots of reasons, but I really do believe that … everybody here cares deeply about children and schools,” Blaise said. “I just want to say I’m really glad we’re having this conversation.”
Becky Vevea is the bureau chief for Chalkbeat Chicago. Contact Becky at bvevea@chalkbeat.org.
