Monday’s editorial about Mayor Brandon Johnson’s handling of the funding dispute with Chicago Public Schools CEO Pedro Martinez repeats the same false narrative that depicts the mayor as a liberal mismanaging funds to the detriment of CPS.
It is unfair to blame Johnson for trying to plug a deficit and fund the school system. Poor state funding of CPS and the bloated debt that previous district heads incurred from their Wall Street friends have created the chaos that the news media and some politicians are pinning on Johnson.
Gov. JB Pritzker, who sent his children to private schools in Chicago, rejected Johnson’s request that Springfield release $1.1 billion in funds earmarked for CPS. Pritzker smacked CPS from the bully pulpit, saying that the General Assembly should not throw more money at a financial mess — a mess his wealthy circle, as we shall argue, created.
State funding for CPS has decreased as a share of total funding. According to Chalkbeat Chicago, CPS’ share of funding from Illinois, based on the state’s evidence-based funding (EBF) formula, dropped from 24% to 21%. Even government watchdog Rich Miller, in an article critical of Johnson, estimates CPS should receive under the EBF law $503 million of the withheld funds.
Johnson requested the $300 million loan to meet a budget shortfall created in part by the governor’s withholding of these funds. CPS needs this money to keep our teachers in the classrooms where they belong.
Martinez, according to the Tribune Editorial Board, refused Johnson’s request to “add $300 million in high-cost debt to the balance sheet” of the Chicago school system. The board argues that Johnson, in a politically motivated attempt to line Chicago Teachers Union’s coffers, wants a new school board that will fire Martinez so that he can obtain this loan.
This rhetoric ignores the fact of Martinez’s ineptitude.
Martinez in his two years as CPS CEO has not done enough to procure the funds needed from the state. Martinez did not even go to Springfield until the very last moment possible to secure the state funds for CPS. As he did not formally ask for $1.1 billion of state funding, Martinez colluded with Pritzker in defunding our schools. This is why the rank-and-file teachers have lost confidence in Martinez’s leadership.
Hardly a windfall to the CTU, teachers are asking for a 9% raise after a period of near double-digit inflation. They also want to save more than 3,500 teaching jobs that would be lost if the budget shortfall is not met. These job losses would result in even larger class sizes and fewer services for our children and teachers.
Pritzker and former Mayor Rahm Emanuel’s billionaire peers on Wall Street dug this huge hole in CPS’ finances. These bankers introduced “toxic swaps” and other outrageous debt instruments to CPS as an alternative method of funding to traditional municipal bonds. These ended up costing Chicagoans billions more in interest than the traditional offerings.
Paul Vallas, during his reign over fiscal mismanagement at CPS, took on “payday bond loans” of more than $650 million. This debt created the CPS budget abyss. It also enriched the Wall Street creditors, who made over $1.5 billion in total interest on the deals. Reportedly, CPS potentially paid Wall Street over $1 billion more in interest than it would have through traditional bond offerings. Vallas’ financial bombs left the CPS budget at ground zero. His successor buried what survived.
As chief administrator of CPS, Wall Street fund manager David Vitale — an Emanuel appointment — issued $1 billion of toxic swaps. A Tribune analysis in 2019 called these a gamble that over the life of the debt payment would cost CPS “an estimated $100 million more in today’s dollars than it would have on traditional fixed-rate bonds.” Vitale moved forward with them anyway, with great benefit to his friends on Wall Street. He then started the rash of school closures that cost the city as much or greater than the cost of keeping the schools open.
What City Hall, the new Board of Education and the state of Illinois must do is renegotiate the terms of these terrible toxic swaps, and, with the support of voters on Nov. 5, immediately move to change the Illinois Constitution to allow for a 3% state income tax on income of more than $1 million per year. This tax on high earnings would provide property tax relief to working people and fully fund our schools.
The Illinois Department of Revenue states that this marginal state income tax could generate as much as $4.5 billion per year; we need this to save our educational system. Massachusetts already has implemented a similar millionaire tax, which generated $1.5 billion last year.
Pritzker should collaborate with Johnson, the General Assembly and the new school board to improve our schools. The rhetoric about taking over CPS is unproductive and beyond the state’s authority.
Our children in Chicago deserve the same opportunities as children in any other city.
Ald. Byron Sigcho-Lopez represents Chicago’s 25th Ward. He is chairman of the City Council’s Housing and Real Estate Committee and a former teacher. Caise D. Hassan is a Chicago resident and president of Granada Center for Human Rights
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