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 The plan has the backing of Republican Governor Bruce Rauner, who
has embraced allowing local governments facing financial turmoil to
file for bankruptcy. But it is strongly opposed by Chicago Mayor
Rahm Emanuel, who controls the city's schools, the Chicago Teachers
Union, and by Democratic leaders, who control the legislature.
Senate Minority Leader Christine Radogno and House Minority Leader
Jim Durkin, both Republican allies of Rauner, said a new approach is
needed to rescue the Chicago Public Schools (CPS)from financial
mismanagement and near collapse.
Rauner told reporters Emanuel has failed to address the school
district's fiscal woes over the nearly five years he has been mayor.
"His message to us in state government has been for months, 'We have
a crisis. We need $500 million. We want the state to give it to us.'
That’s not a reasonable message. That’s not a reasonable request,”
Rauner said.
 The nation's third-largest school system has a structural budget
deficit topping $1 billion and credit ratings that have fallen deep
into the "junk" level.
The district's current budget has a $480 million gap that officials
hope to fill with bigger pension funding support from the state. But
the plan has become entangled in a state budget stalemate between
Rauner and Democrats.
The Republicans' plan would amend an existing law permitting state
oversight of fiscally troubled schools to include CPS and allow for
an independent authority to run the district, while making it clear
the state is not liable for school debt. Once solvency is regained,
an elected school board would take control.
The plan would also open the door to Chapter 9 municipal bankruptcy
while protecting general obligation bondholders with a statutory
lien.
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"The mayor is 100 percent opposed to Governor Rauner's 'plan' to
drive CPS bankrupt," Emanuel spokeswoman Kelley Quinn said in a
statement, adding that the state has been shortchanging Chicago
students.
House Speaker Michael Madigan rejected the plan, pointing to
Michigan's takeover of the city of Flint, which has led to a health
crisis from lead-tainted water.
"The disaster in Flint, Michigan, is a very timely example of how
reckless decisions just to save a buck can have devastating
consequences on children and families," Madigan said in a statement.
Senate President John Cullerton, a Chicago Democrat, said the
Republicans' "mean-spirited" plan is not going to happen.
CPS has scheduled an $875 million bond sale for next week, partly to
free up revenue for its sagging budget.
(Additional reporting by Karen Pierog in Chicago; Editing by Lisa
Von Ahn and Matthew Lewis)
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