Chicago mayor buys peace with teachers,
fiscal impact uncertain
Send a link to a friend
[October 12, 2016]
By Karen Pierog and Dave McKinney
CHICAGO (Reuters) - A tentative deal
reached late on Monday between the Chicago Public Schools (CPS) and its
teachers union averted a strike that had been scheduled for Tuesday but
the impact on the district's already shaky finances was uncertain.
Chicago Mayor Rahm Emanuel, who controls the nation's third-largest
public school system, agreed to initially pour more surplus revenue from
city development districts into school coffers. But it was not clear if
the increase to $88 million from the $32.5 million the district already
folded into its current budget would be sufficient to fund new contract
The second-term mayor said the agreement will make CPS finances
But Laurence Msall, president of local government finance watchdog the
Civic Federation, said the surplus tax increment financing dollars were
a one-time revenue source and would not solve the schools' deep fiscal
"It’s not enough in terms of the deficit the Chicago Public Schools
face," Msall told reporters on Tuesday.
Even Emanuel’s city council floor leader had questions about earmarking
unobligated money from the economic development districts in the city.
“Those TIF dollars build up over time, and when you empty that account,
that money is gone,” said Alderman Patrick O’Connor, referring to tax
increment financing. “So clearly, to rely on a settlement that relies on
TIF surplus is not something you are going to be able to guarantee every
CPS has received about 52 percent of annual surplus revenue from
Chicago's tax increment financing districts. But that revenue stream has
fluctuated greatly over the years, making it unreliable.
The proposed deal was enough to stop the Chicago Teachers Union (CTU)
from going forward with its planned Tuesday strike, which would have
been the third since 2012.
Chicago schools are grappling with escalating pension payments that will
jump to $720.2 million this fiscal year from $676 million in fiscal
2016, as well as credit ratings that have fallen to junk level. The
district, which has nearly 400,000 students, ended fiscal 2016 on June
30 with a $7 million operating deficit, according to a school financial
[to top of second column]
Chicago Teachers Union President Karen Lewis (L) and Vice President
Jesse Sharkey listen to a question during a news conference on the
seventh day of their strike in Chicago, Illinois, U.S.September 16,
2012. REUTERS/John Gress/File Photo
The proposed four-year contract, which has a retroactive start of
July 1, 2015, was posted on CTU's website on Tuesday. It commits CPS
to continue to cover all but 2 percentage points of the current
teachers' pension contributions of 9 percent, a payment the
cash-strapped district had tried to phase out. The so-called 7
percent pension pickup will apply only to educators hired before
Jan. 1, 2017.
Base salaries for teachers hired after Jan. 1 of next year would be
increased by 3.5 percent in January and 3.5 percent in July.
Current teacher salaries would remain flat until a 2 percent
increase in fiscal 2018 and a 2.5 percent hike in fiscal 2019.
The deal creates early retirement programs if a sufficient number of
eligible educators participate. The programs include nonpensionable
lump sum payments CPS would have to make to teachers and others
covered under the contract by Dec. 31, 2017.
The union late on Monday also persuaded CPS to agree to put teacher
assistants in kindergarten through second grade classrooms with 32
or more students.
The tentative agreement must be voted on by the CTU’s house of
delegates, followed by a vote by the CTU's members.
(Additional reporting by Renita Young and Timothy McLaughlin in
Chicago; Editing by Matthew Lewis)
[© 2016 Thomson Reuters. All rights
Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.