In Chicago, who should bear the burden of dwindling education money?

The Chicago Teachers Union has threatened to strike if it and the city can't agree on a new contract Monday.

Jose M. Osorio/Chicago Tribune/AP
Parents, children, and supporters walk and chant following a press conference held in Chicago's Ravenswood neighborhood near Mayor Rahm Emanuel's home on Monday, Oct. 10, 2016.

The nation’s third largest school district is on the brink of its second major strike in four years. This time around, though, it's about money, not teacher accountability.

Teachers in the Chicago Public Schools are threatening to picket starting Tuesday morning if union negotiators and the city can’t agree on a new contract by the end of Monday. The Chicago Teachers Union (CTU) has demanded the city continue to pay its pensions, as well as allocate $200 million more for school resources. But Mayor Rahm Emanuel and the Chicago Board of Education have countered by offering to increase teachers’ base wages over four years instead.

The looming walkout exposes a conflict that has been festering in cash-strapped Chicago: Who should pay for the city’s education system? The union has said the city should by diverting more revenue from special development districts known as Tax-Increment Finance (TIF) districts. But the city said this revenue is unreliable, not to mention the fact the city is overwhelmed by a ballooning pension system, bad credit ratings, and debt. And taxpayers, while sympathetic to the union, are tired of shouldering additional costs of the school district. 

“I think the average Chicagoan is pretty well tapped out at this point,” Pat O’Connor, an alderman and Mr. Emanuel’s City Council floor leader, told the Chicago Tribune. “I don’t think people will look at this like they did four years ago and say, ‘Find the money,’ because they know when they say find the money, the money comes from them.”

The union has threatened to start to picket before the start of the school day Tuesday if it and the city can’t agree on a new contract. Teachers have been without a contract since the one signed after the 2012 strike over teacher accountability expired at the end of June 2015.

In January, the Chicago Public Schools (CPS) and the union settled on a tentative offer to replace the pension system, only to have the rest of the union’s 40-member bargaining team reject it, according to USA Today. Teachers currently contribute 2 percent of their salary to their pensions, while CPS contributes the remaining 7 percent. But that system has tripled in recent years, swelling to $10 billion in liabilities. In response, the city proposed replacing the pension system with an 8.75 percent base salary raise over four years. This move would save the city $130 million annually, according to USA Today.

The district budget for fiscal year 2017, meanwhile, is $5.4 billion. The budget the board approved in August relies on property taxes, borrowing, and $215 million in state funding, which is frozen, as the governor and state lawmakers are in a deadlock over a wider pension overhaul. 

The school system, which is independent of the city, also had a $7 million deficit in its operating funds on June 30, according to a school financial report Reuters first reported about.

The legislature has authorized the school district to collect $250 million more in property taxes to pay for pensions, however.

In addition to no cuts to benefits, the union says the new contract should increase spending on the school district’s roughly 380,00 students by $200 million.

“People need to understand this isn’t just about money for teachers,” Susan Sadlowski Garza, an alderwoman and who worked as a Chicago Public School counselor for 22 years, told the Chicago Tribune. “It’s about aides, class size, resources. What’s happening inside the schools is an atrocity.”

To supply this funding, the union wants the city to dip into TIF district funding. These 146 districts created by state law earmark tax revenue for development in blighted areas, including to infrastructure, redevelopment, schools, and other purposes. But the city has said the money is already included in next year’s school district budget and is an unreliable source of income. While the city’s TIF districts generated $113.6 million so far this year, it produced only $40,000 in surpluses in 2011, the city told Reuters.

This impasse comes as credit-rating agencies have placed the school district, city, and state to “junk” or "near junk" status, or below or near below investment grade.

The city hasn’t been able to rely on as much state support as it used to either. A 2014 study gave Illinois a “B” rating for its effort for education funding, or differences in state spending relative to the state’s fiscal capacity, according to The Washington Post. But Republican Gov. Bruce Rauner is at a deadlock with the state legislature over details of the budget. The governor has also tried to curb union power, suggested the district file for bankruptcy, and unsuccessfully attempted to take over the school district’s finances.

Other large school districts haven’t been immune to budget problems. In 2012, the Los Angeles Unified School District, the second largest in the country only behind New York City, faced a more than $800 million budget deficit. But a referendum California Gov. Jerry Brown proposed to make up for the $6 billion shortfall from the recession passed. The proposition raised state sales tax for four years and the income tax on people making more than $250,000 for seven years.

But Chicago suffers from a lack of trust, fueled by the city’s financial situation, increase in property taxes and other fees, and a spike in street violence.

“It will be a difficult strike,” University of Illinois at Chicago professor and former alderman Dick Simpson told the Associated Press. “I’m not sure that anyone wants to play it all the way out.”

This report contains material from the Associated Press and Reuters.

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