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Chicago Budget Veto Creates New Uncertainties

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Chicago--The opening of school in Chicago, the nation's third-largest school district with more than 430,000 students, was thrown into doubt last Thursday when the Chicago School Finance Authority unexpectedly vetoed the district's budget.

Officials of the state, the city, the school system, and the Chicago Teachers' Union had worked for more than two months to devise a delicate financial agreement that would see the system through this school year.

All parties to the negotiations expressed reservations about the complex plan and said that the city's schools needed a permanent solution to their chronically disruptive fiscal problems. But observers expected the finance authority to accept the 1982-83 so that schools could open on time.

The finance authority, an independent agency created by the Illinois legislature two years ago to monitor the troubled district's spending, rejected the plan by a 4-to-1 vote, placing the budget "in a revolving door," said Martha Jantho, a member of the Chicago school board.

Under state law, schools cannot open without a completed budget. A spokesman for the board said Thursday that, presumably, the negotiators would have to begin again from scratch.

This is the third straight year that budget decisions and teachers' contract negotiations have gone down to the wire. Last year, the finance authority accepted a budget based on financial tradeoffs similar to those negotiated this year.

Complicating matters even more was the announcement by Tyrone C. Fahner, Illinois attorney general, that he believed the Chicago school board acted illegally when it made budget cuts required by the agreement with the state. Mr. Fahner said that he planned to sue the board for making the cuts in a closed session, in violation of the state's open-meetings law.

Complex Funding Scheme

After lengthy negotiation sessions initiated by Mayor Jane M. Byrne in late August, the complex funding scheme was devised to give the Chicago district a balanced budget of $1.3 billion. Both a teachers' strike and a shutdown for lack of funds were considered strong possibilities.

The trading began in early July, when the state legislature approved a $60-million property-tax increase so that the school district could continue to pay for teachers' pensions. In late August, Gov. James R. Thompson threatened to veto the tax package unless the city, the school board, and the Chicago Teachers Union made concessions.

Under the arrangement negotiated at Mayor Byrne's initiative, the Governor agreed to veto only part of the property-tax increase, and offset the burden on taxpayers by reducing other forms of school levies.

Also under the terms of the accord:

Teachers are to give up a day's pay, for a total saving of $3 million; another $800,000 in pay concessions was agreed to by other employees' groups.

The school board sliced $25.7 million from the budget in noninstructional areas such as building maintenance. It is this action that Attorney General Fahner said he plans to challenge.

The city was to supply $15 million from federal community-development and job-training funds.

The state "showed" the district how to amend claims for special-education reimbursements so that Chicago can obtain an additional $4 million, most of it in state funds.

The school board asked for control of a $40-million "working cash fund" held by the school finance authority. The district would have been able to collect $5 million in interest generated by the fund.

Governor Thompson, by amending his threatened veto, allowed the city school board to raise property taxes by $24 million for the teachers' pension fund.

Key Element in Transaction

The tax increase for pensions was considered a key element in the transaction. In last year's negotiations, the school district had agreed to pick up teachers' share of payments into the pension fund. Although the board insisted throughout the summer that the pension agreement was binding for only one year, the teachers' union was determined to include it in the new contract. Giving it up, union leaders said, would have been tantamount to a 7-percent salary cut.

The teachers' union agreed to yield one day's pay in exchange for leaving the rest of its contract intact.

"We made a $3 million contribution to a $90 million deficit," Chuck Burdeen, director of communications for the union said. "We're satisfied we made the contribution we could and it was nowhere near the $38 million they asked for."

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