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Chicago Schools Get Extra Time To Settle On Balanced Budget

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Unable to balance its budget, the Chicago school system shut down last week as Illinois legislators gathered in Springfield to address the financial crisis that threatened to prevent schools in the nation's third-largest district from opening on time Sept. 8.

But rather than approving new funding for the city's schools, lawmakers were expected to simply allow the Chicago school board to operate schools without a balanced-spending plan until Sept. 13.

Such a decision would throw the ball back to the school board and the Chicago Teachers Union, which have been negotiating for weeks over work-rule changes and benefit cutbacks. If no new contract is reached, the union could call a strike.

Chicagoans had hoped that lawmakers would approve a complex bailout plan proposed by Mayor Richard M. Daley that calls for issuing bonds to close part of the $300 million budget gap. But even that plan relied on $82 million in concessions from the teachers' union, whose contract with the district expired Aug. 31.

"Everyone is still waiting for everyone else to act,'' said Diana Nelson, the president of Leadership for Quality Education, a business-oriented reform group. "This has got to be solved with everybody putting something on the table.''

At some point, the legislature will have to reconvene to approve any final agreement to balance the budget, since it is likely to involve changes that must be approved by lawmakers.

All summer, as concern over the budget shortfall increased, Gov. Jim Edgar and legislative leaders insisted they would not call a special session to help Chicago's schools unless the school board and its unions could show substantial progress in identifying savings on their own.

That attitude changed late last month after the board reached agreements with the district's 19 other labor unions, including a long-sought reform that will put all building personnel under the general supervision of the school principal.

Mr. Daley also urged the legislature to take the first step toward breaking the logjam. He also made that easier by crafting a plan that did not require any new state money.

But the idea of helping Chicago's schools when other Illinois districts also face severe financial problems did not sit well with many downstate lawmakers. One lawmaker proposed calling a special session later this fall to consider a new statewide school-funding method.

Republicans also seized on the special session to offer their own alternatives, including a plan by the Senate president, James (Pate) Philip, for a pilot voucher initiative in Chicago.

The Mayor's plan calls for the School Finance Authority, which oversees the system's budget, to issue $300 million in bonds over two years. This year $120 million would go toward plugging the budget gap. The bond issue would not result in a tax increase because the bonds would be backed by part of a tax levy already collected by the authority.

But after the first two years, the bonds would have to be paid for by some other revenue source, possibly proceeds from riverboat gambling in Chicago or from the state income-tax increase that is expected after the 1994 gubernatorial election.

Union Changes Sought

To cover the rest of the shortfall, the Mayor proposed a package of administrative changes, budget cuts, and legislative action, including transferring $55 million from the teachers' pension fund, a move the union has resisted.

The union is being asked to agree to other unpalatable changes, including having members contribute toward their health-care premiums, eliminating bonuses teachers receive for taking classes, and increasing the amount of time high school teachers spend instructing students, from 200 to 280 minutes a day.

Lengthening teachers' instructional day would save an estimated $45 million, according to the Mayor's figures, by eliminating about 1,000 teaching jobs.

Mr. Daley also has recommended taking two years, instead of one, to give schools the full amount of the state compensatory aid they are scheduled to receive under the 1988 school-reform law. That money, which previously was siphoned off by the central bureaucracy, has been critical in enabling the local school councils that govern Chicago's schools to pursue improvement plans.

"The reform community strongly resists any attempt to change the agreed-upon timetable for shifting those funds,'' Ms. Nelson said.

Hope for Reform

The Chicago reform community had held out hope that the special session might result in improvements to the reform law. For example, a broad coalition, including the Mayor, the school board, reform groups, and the business community, is seeking to limit special job protections for teachers whose jobs are eliminated.

Members of local school councils and other supporters of reform also were hoping that the legislature would simplify the improvement-planning process that councils must follow and clarify the authority of local school councils over curriculum and money raised by schools.

Because of a history of financial problems, including bankruptcy in the late 1970's, the Chicago schools are required to submit a balanced budget to the School Finance Authority by Aug. 31. This year, the school board cobbled together a $2.8 billion budget founded on the Mayor's proposals and a letter from the Governor promising to hold a special session. The finance authority rejected the proposal.

That decision forced the system to shut down the following day. In addition to the central office, 10 subdistrict offices and 11 year-round schools in the city closed immediately. General Superintendent Argie K. Johnson said the district would provide only limited essential services, performed by volunteers.

Retirement Exodus

Even if the budget problems can be resolved, the opening of school in Chicago will be complicated by the exodus of hundreds of veteran employees who took advantage of an early-retirement option extended to Chicago school employees by the legislature last spring.

The school board announced that more than 2,635 workers took advantage of the package, including 98 out of 600 principals, 2,477 teachers, and 60 central-office and subdistrict administrators.

The early retirements saved the system $10 million, far less than the $40 million the teachers' union had estimated.

The school board imposed a hiring freeze on most teaching positions until the talks with the teachers' union are completed.

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