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Officials in Chicago Warn of a Shutdown Over Budget Crisis

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The Chicago public schools are facing a budget crisis so severe that it threatens to shut down the system next fall unless the Illinois legislature comes up with more money, district officials warned last week.

By law, the schools cannot open in September without a balanced budget. And while the Chicago board of education has warned of serious deficits in the past few years and then patched together balanced spending plans, an estimated $415 million shortfall in the district's $2.6 billion budget for the next fiscal year is too large for such fixes, district officials maintain.

"This isn't crying wolf any more,'' Stephen R. Ballis, a member of the school board, said last week. "The wolf is here.''

The board, local school-reform-advocacy groups, community organizations, and others are furiously lobbying the legislature, which is scheduled to conclude its session by the end of this week, for more money for the city school system.

If the district does not get the money, its employees could be faced with a double-digit pay cut, or the system could simply fail to open its doors and pay its creditors in the fall, according to school officials.

At the same time, the school board has begun what are bound to be difficult negotiations with the Chicago Teachers Union, whose contract expires in August. The board has pledged to seek dramatic changes in work rules and job protections.

In another development last week, the board announced that it has narrowed its search for a new general superintendent to two candidates: Laval S. Wilson, the state-appointed superintendent of the Paterson, N.J., schools and a former schools chief in Boston, and Argie K. Johnson, the deputy chancellor for instruction in the New York City school system. The final selection is to be made by the end of next month.

'No State Leadership'

The fiscal crisis, meanwhile, has prompted politicians, business groups, school-reform organizations, and community groups to draw up plans for closing the district's budget gap while strengthening its nationally watched reform effort.

But the growing momentum in Chicago for such changes is being stymied at the state level, local officials contend. Gov. Jim Edgar, a Republican, is staunchly opposed to raising taxes, and the Illinois Senate is now controlled by Republicans who share that view and have traditionally been unsympathetic to Chicago's problems.

Asked if he would support new aid for Chicago beyond the $110 million in additional education funding proposed for Illinois schools in his fiscal 1994 budget, Governor Edgar told the Chicago Sun-Times this month: "Even if I'm for more, I don't think you're going to see ... any real support in the General Assembly until we first see some efforts on the part of the school board and unions to solve their own problem.''

Meanwhile, Democrats in the legislature with close ties to organized labor are blocking any changes in union work rules.

The attitude in Springfield has left some Chicago observers pessimistic that the current session will produce a solution to the deficit or remove some of the impediments to reform.

"There is no leadership in the state whatsoever on this issue,'' G. Alfred Hess Jr., the executive director of the Chicago Panel on Public School Policy and Finance, said.

Although the legislative session is expected to end this week, the leaders of both chambers will meet next month to hash out an omnibus bill that could contain money and school-reform measures for Chicago.

Job Guarantees Targeted

Local reform advocates acknowledge that the district will not get any additional money without making significant changes, most of which are opposed by the powerful Chicago Teachers Union.

At least eight reform plans are circulating in the city, all of which call for eliminating or modifying the practice of guaranteeing teachers jobs if their schools' enrollments decline or their programs are closed.

These teachers, called "supernumeraries,'' now number about 200, according to most estimates, but that number could increase significantly if class sizes are boosted to save money.

In a break with his past support for the C.T.U., Mayor Richard M. Daley released a reform plan last month calling for supernumerary positions to be eliminated and for the process of firing incompetent teachers to be streamlined.

But Jackie Gallagher, the spokeswoman for the union, said the supernumerary issue is "absolutely not negotiable.''

"One of the bottom-line, foundation pieces of our union is to protect the seniority rights of its members,'' she said.

There is also unanimous agreement among the reform plans that principals must be in control of all of the employees in their schools, including the building engineers, who clean and maintain schools.

In addition, the school board's plan calls for teachers to work 43 weeks a year instead of 39, with the extra time devoted to professional development and training. It also calls for teachers to work an extra half-hour each day.

"It really is 'get the teachers time' by every entity that has offered a plan to save the schools,'' Ms. Gallagher charged.

State Bonds Proposed

Most school groups and officials favor a state income-tax increase to provide more money for schools in Chicago and other districts. There are 111 districts on the state's financial "watch list,'' Mr. Ballis, the school board member, noted.

The Chicago board of education also is prepared to raise property taxes, but that option has been rejected by Mayor Daley and also would need legislative approval.

The financial situation is seen as so dire that it has prompted Martin Koldyke, the influential chairman of the School Finance Authority, which oversees the system's finances, to propose that the state issue bonds to provide more money for Illinois schools.

Mr. Koldyke's proposed "Illinois education investment act'' calls for the state to authorize the sale of $1.3 billion in general-obligation bonds to generate money for school districts. Under his plan, Chicago would receive about $392 million.

The proposal would link the bond sale to significant changes in the teachers' contract, including lengthening the school day and year for teachers and creating a new way to assess teachers and dismiss those whose performance does not improve.

Mr. Koldyke's plan also proposes creating three top-level positions in the district's central office to boost its managerial talents and calls for purchasing a new management-information system.

The plan would generate enough money to get districts past the 1994 election season, but would require a tax increase after that to pay off the bonds.

'Hold Hands and Jump'

Even if the Chicago school system is allowed to take measures that have closed past budget gaps--including receiving state aid early, shifting money from the teachers' pension fund to pay for salaries, and forgoing the repayment of money into a reserve account--budget analysts say it will still be more than $200 million short.

To make up the shortfall, teachers and other employees could be faced with taking an 11 percent pay cut, Mr. Hess of the Panel on Public School Policy and Finance said.

Diana Nelson, the president of Leadership for Quality Education, a business-oriented reform group, said a pay cut would be the worst possible outcome, since teachers would be demoralized and there would be no reform measures passed. The system also could declare municipal bankruptcy, she noted.

Given the pressing problems, the new superintendent will arrive at an extraordinarily difficult time.

"There is going to have to be a compromise,'' Ms. Nelson said, "and everyone is going to be somewhat unhappy. We need strong leadership if everyone is going to hold hands and jump at once.''

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