A essential mass of Chicago college board members has formally come out in opposition to reimbursing Metropolis Corridor for a disputed pension fee, dooming its possibilities of passing. That leaves Mayor Brandon Johnson with lower than every week to both change their minds or work out one other method to provide you with the cash he wants to shut town’s 2024 price range within the black.
Board of Schooling President Sean Harden postponed a pivotal vote final week on the approval of a $175 million pension fee from Chicago Public Faculties to town, a transparent signal it lacked sufficient help to move. He mentioned the delay was on account of an imminent contract settlement with the Chicago Lecturers Union — although that deal has not been reached.
Over the weekend, seven of 20 voting board members signed a letter telling Harden that their votes will stay in opposition to the pension fee if he calls a particular assembly this week to reintroduce the difficulty. Whereas approval of the pension fee solely wants a easy majority to move, a corresponding price range modification can be crucial, and that wants two-thirds of votes — 14 out of 20.
“We can’t in good conscience make funds in the direction of issues for which we’ve no sustainable technique of elevating income,” the board members wrote in a letter first reported by Chalkbeat Chicago.
Nonetheless, the mayor’s workplace mentioned Monday that it might preserve working with the board to discover a answer and it “continues to anticipate CPS” to make the pension fee. Johnson has not offered a Plan B.
The postponed vote final week would have amended the CPS price range to incorporate three extra prices: The pension fee covers CPS workers who aren’t lecturers, a CTU contract that’s nearing settlement and a yet-to-be settled settlement with the brand new principals union. The mayor has pushed for CPS to pay all three bills utilizing a file tax-increment financing surplus offered by his workplace and different strategies, resembling short-term borrowing or debt restructuring.
CPS CEO Pedro Martinez has rejected borrowing or refinancing as fiscally irresponsible. In consequence, he has mentioned CPS doesn’t have the cash to make the pension fee and has instructed the board to as an alternative concentrate on masking the prices of the labor contracts.
The difficulty has divided the board largely alongside pro- or anti-CTU strains, with mayoral appointees and most CTU-supported elected members in favor of constructing the pension fee. The group that’s siding with Martinez and signed the letter to Harden is generally made up of elected members who beat CTU-backed candidates, independents and one who acquired some CTU cash however has not constantly voted with that caucus.
Harden didn’t reply questions Monday about whether or not he has accepted that board members received’t approve the pension fee.
Board member Che “Rhymefest” Smith mentioned he can’t see himself approving any borrowing or refinancing and signed the letter to let the mayor’s workplace know that it wants to maneuver on.
“I felt it essential to make our place clear, simply in order that if there are some other alternatives that the mayor has, he would no less than know the place CPS stands,” he mentioned.
The mayor’s workplace and a few Metropolis Council members have warned the college board that town may curtail monetary help for the college district if the pension fee doesn’t come by. However Smith balked at that concept.
“He’s the training mayor, and I resent the implication that he wouldn’t combat with CPS to be sure that it will get the {dollars} it deserves,” Smith mentioned.
Debt refinancing was a late-emerging possibility given CPS already restructured some debt this college 12 months below Martinez’s course. However Martinez and several other board members rejected that concept.
“Debt refinancing has change into a instrument: ‘Oh, I understand how to do it, we will seize some price financial savings,’ ” mentioned board member Angel Gutierrez, who signed the letter to Harden. “Positive, you’re realizing these preliminary financial savings proper now, however that debt continues to mount.”
Gutierrez acknowledged, nevertheless, that CPS already used that instrument this 12 months. And regardless of his opposition, he mentioned he doesn’t need to take away the district’s flexibility to make use of refinancing to unravel subsequent college 12 months’s price range shortfall.
In the meantime, Johnson and his political allies and monetary advisers have spent the previous couple of weeks making an attempt to persuade the partly elected, partly appointed college board to reimburse town, which already made a $400 million fee to the Municipal Workers’ Annuity and Profit Fund however budgeted $175 million from CPS to cowl its staff.
If town doesn’t get the cash by March 31, Johnson will basically have what quantities to 3 dangerous decisions: Shut the books on 2024 within the purple, discover the $175 million for the pension fee elsewhere within the metropolis price range or dip into town’s reserves.
Ald. Jason Ervin (twenty eighth), Johnson’s handpicked chair of the Metropolis Council’s Funds Committee, hinted strongly that the mayor would execute no matter his “Plan B” is with out going again to the Metropolis Council.
“It’s primarily an accounting concern at this level,” Ervin informed the Solar-Instances, downplaying the difficulty.
“If CPS doesn’t give the cash, then our fund stability takes a $175 million hit. … It received’t be a legal responsibility on the books. It’ll be successful to the fund stability, pure and easy. It’ll be a discount in your fund stability,” he mentioned. The fund stability contains {dollars} that can be utilized for any objective.
Pressed on whether or not the Metropolis Council must approve a discount within the fund stability, Ervin mentioned, “No. That is an accounting concern.”
Ald. Walter Burnett (twenty seventh), Johnson’s handpicked chair of the Metropolis Council’s Zoning Committee, mentioned he expects Johnson to “do what’s crucial” to shut the books on 2024 within the black.
“So as to get it finished, he most likely received’t come again to the Council,” Burnett mentioned Monday. “If he can do it with out coming again to the Council, I’d think about he would most likely do this as a result of it must get finished.”
Ald. Invoice Conway (thirty fourth), vice-chair of the Council’s Finance Committee, mentioned it’s not clear what Johnson “may pull to unravel this drawback.”
However Conway mentioned it might be a “very dangerous selection for a politically weakened mayor” to both raid the reserves or switch $175 million round inside the scope of his $17.1 billion price range to cowl the college pension fee with out Metropolis Council approval.
“He could possibly discover some authorized authorization for it in some earlier debt factor that I’m not accustomed to,” Conway mentioned. “However he clearly shouldn’t do this. We’re a co-equal department of presidency. Metropolis Council and the mayor’s workplace actually should be working collectively.
“Hopefully he’s seen the backlash of not doing so in earlier situations, like eliminating ShotSpotter, firing [CPS CEO] Pedro [Martinez] and his barely-passed price range for that matter. If Mayor Johnson likes to name himself the `collaborator-in-chief,’ I hope that he’ll stay as much as that self-styled nickname in how he chooses to unravel this drawback.”
One other veteran supply intimately accustomed to the mechanics of town price range mentioned Johnson may simply “take cash out of medical funds” with out risking what can be a humiliating political defeat within the Metropolis Council.
“He can’t afford to … lose one other vote. He’d be higher off maneuvering inside the context of the price range he’s already handed than sticking his chin on the market with everyone,” the supply mentioned.
Actually, Johnson has already established a precedent for transferring cash round with out Metropolis Council authorization.
Shortly earlier than closing the books on 2023, Johnson shifted $95 million in federal pandemic aid funds to cowl the mounting price of Chicago’s migrant disaster. He knowledgeable Metropolis Council members, however didn’t search their approval.
Conway and former Finance Chair Scott Waguespack (thirty second) subsequently joined forces on a proposed ordinance that may have required the Council’s prior approval for any spending exceeding $1 million from funds town acquired from the bundle of federal COVID-19 aid generally known as the American Rescue Plan. However the ordinance was buried within the Guidelines Committee.
