Published Online: September 21, 2012
Published in Print: September 26, 2012, as Cost Issues Unresolved in Chicago
Updated: November 13, 2012

In Strike's Wake, Chicago Faces Budget Questions

Parents walk their children to Alexander Graham Bell Elementary School in Chicago on Wednesday. Students returned to school less than a day after teachers ended a seven-day strike.
—Michael Tercha/Chicago Tribune/MCT

After teacher walkout ends, difficult decisions remain

Chicago teachers voted last week to suspend a 7-day-old strike, sending some 350,000 students back to the classroom and paving the way for the teaching force to vote on a tentative contract.

But for many in the Windy City, the contract has raised another potentially tall hurdle: how the cash-strapped district will manage to pay for it.

District officials estimate the agreement forged with the Chicago Teachers Union will cost $295 million over four years—cheaper than the two previous city teachers’ contracts, but nevertheless costly in a school district that estimates it will carry a $1 billion shortfall by fiscal 2014.

The contract will run for three years, but can be extended for a fourth if the union and the school board jointly agree to it.

The new agreement raises salaries across the board for teachers by an average of 17.6 percent over four years and maintains premiums for experience and advanced degrees.

The district has touted a number of cost savings tucked into the pact, achieved through changes to sick-day and leave policies and a new wellness plan. And the district’s overall financial health is tied to broader issues, including some, like teacher pensions, that are governed by state rules.

Still, observers said they felt the contract could have done a better job at outlining a path forward for the cash-strapped district.

Students at Frazier International Magnet School in Chicago wait outside before the start of school on Wednesday.
—Scott Olson/Getty Images

“It’s disappointing,” said Laurence J. Msall, the president of the Civic Federation, a nonprofit, nonpartisan watchdog on Chicago-area finance issues, about the tentative agreement. “It’s an overemphasis on the short term, rather than long-term perspective on how to stabilize and right-size the system.”

Unfinished Business

The decision to suspend the strike came after a surprise delay the prior weekend, when delegates deferred a vote on the outline of a deal, stating that they needed more time to digest it.

“I think people were really committed to their demands and really believed in them,” said Jesse J. Sharkey, the vice president of the CTU. “And when the final settlement terms came out, it required a degree of time to come to terms with the gap between the reality and what their hopes had been.”

Whatever their concerns, teachers seemed to be reassured by Sept. 18, when the union’s more than 700 delegates voted overwhelmingly voted to return to their classrooms.

The contract must still be ratified by CTU members. According to an Associated Press report, the members are scheduled vote on the deal on Oct. 2. Neither the union nor the district would provide a full draft copy of the agreement to media organizations.

In materials provided to reporters, the city noted that the cost of the contract, at $74 million per year, is far less than the city’s 2003 contract, which cost $129 million a year, and the 2007 contract, which cost $133 million a year.

Even so, no one seems to know yet how the agreement will be paid for.

For starters, there is next to no cushion left in the district’s current budget. The district’s fiscal 2013 budget, approved in August, drained the district’s reserves to close a $665 million budget shortfall and to help fund an agreement struck in July with the union to bring on 512 new teachers.

The district also raised its property-tax levy by the maximum amount this fiscal year and last, following other hikes in fiscal years 2009 and 2010.

Cuts so far have come from a variety of areas. In the fiscal 2013 budget, for example, the district agreed to streamline bus routes, end duplicative programs, and further reduce central office staff, for savings of some $144 million.

Strike Accords

Here are key elements of the tentative pact between the Chicago school district and the Chicago Teachers Union. The agreement still must be ratified by rank-and-file union members.

Pay Increases
• Teachers will receive a 3 percent salary increase in the first year of the contract and 2 percent in both years two and three. If the parties agree to extend the contract for a fourth year, raises will be 3 percent.
• A provision allowing the district to deny raises for fiscal reasons was deleted.

Differentiated Pay
• No specific provisions for merit pay or career ladders are included. A joint union-district committee is to be established to explore differentiated-pay options.

‘Steps’ and ‘Lanes’
• Premiums for advanced degrees and experience are retained. Those for experience will be weighted more heavily toward senior teachers.

Teacher Evaluation
• Measures of student academic growth will top out at 30 percent of each teacher’s evaluation rating—the amount specified in state law.
• During 2012-13, tenured teachers cannot be subject to “adverse action” based on their ratings.
• A joint union-management committee will pilot the use of student surveys as part of the evaluation system and recommend whether to incorporate them.
• Teachers who receive a “developing” rating—the second-lowest mark— will be moved to an “unsatisfactory” rating after two years unless they improve by at least one point on a zero-to-400 scale.
• Tenured teachers with “proficient” or higher scores will be rated every two years.
• Teachers receiving an “unsatisfactory” rating may appeal their scores.

Layoffs and Recalls
• When a school must cut positions, teachers rated “unsatisfactory” will be dismissed first, followed by probationary teachers.
• When schools are closed or consolidated, teachers will follow their students if positions are open at the receiving school.
• As part of a new hiring mechanism, displaced or laid-off tenured teachers with a “proficient” or higher rating will join new applicants on a hiring list. Principals must interview candidates for open positions from that list, including at least three tenured teachers, but will have the final say over hiring. However, the board of education must try to staff 50 percent of open positions with laid-off teachers. Tenured teachers not selected for rehire must be given a reason why.
• Laid-off teachers will receive up to 5 months of pay while in a reassignment pool, followed by 5 months of reduced pay in a pool of long-term substitutes.

Class Size
• An additional $500,000 is provided to aid a joint committee in investigating and resolving overcrowding. District policy caps the size of most classes at 28 to 31 students.

Benefits
• Health-insurance-contribution rates are frozen, but all employees must join a “wellness” initiative.
• Payouts for sick leave are canceled going forward, though sick days can be put toward medical or family leave.
• An enhanced pension program and payout for unused personal days are eliminated.

School Day and Year
• The school day will be extended by an hour and 15 minutes for elementary school students and by 30 minutes for high school students.
• Ten days will be added to the school year, for a total of 175 full and 6 half-days.

Meanwhile, additional pressures loom.

Chief among them, according to Mr. Msall, is the fact that the district will be expected to increase its contribution to the city teachers’ pension system this year, following the expiration of a law that had allowed the district to reduce its contribution for three years.

Financial pressures already caused credit agencies to lower the their ratings for the district this summer.

'Elephant in the Room'

The district’s financial straits were a subtext in the strike negotiations, providing one of the areas of tension that made an agreement so difficult to forge.

“The system’s going to shrink, and that was the elephant in the room,” said Robert A. Bruno, a professor of labor relations at the University of Illinois at Champaign-Urbana. “There was no agreed-upon way to have that discussion within the bargaining process.”

But such concerns did inform the discussions. With the possibility of future layoffs and school closings looming because of the budget difficulties, the district and the union fought mightily over tenured teachers’ ability to be rehired if they were to lose their positions.

In the end, the two sides appear to have split the difference over such “recall rights,” agreeing to put some displaced teachers on a preferred-hiring list.

Chicago district officials say they have made no firm plans on how to create cost savings to finance the contract.

“There’s a lot of rumors flying around about what we may or may not do this year around any school actions, and that’s all they are now—rumors,” said Becky Carroll, the district’s chief communications officer. “I think they were placed out in the ether to distract from what was happening at the bargaining table. At this point, we don’t have any specific plans for school options.”

At a Sept. 19 press conference, Chicago Mayor Rahm Emanuel also demurred when pressed by reporters about the costs associated with the contract. “When the school system looks at [the budget], they’ll look at what the academic standards are, they’ll look at the enrollment, and they’ll make some choices,” he said, according to the Chicago Tribune.

Mr. Msall expects the menu of choices to be limited. “The likelihood is that the district will accommodate that level of increased salary only by reducing its overall number of employees, and possibly by closing schools, especially the underenrolled or underperforming schools,” he said.

Union Sees Options

But the city teachers’ union believes that the district has other options, especially since, in the past, it has opened charter schools in the wake of some closings. The union believes that the city’s tax-increment financing program, used to promote economic development, should be focused on open-enrollment, noncharter neighborhood schools.

“Running quality schools requires a level of resources, and our union feels there are still too few resources in the schools,” Mr. Sharkey said.

He also charged the district with “willful blindness” in how it carried out prior school closures, which he said has forced some students to cross gang lines or to attend another low-performing school.

Related Blog

School closures have long been controversial in Chicago, beginning as far back as the Renaissance 2010 initiative, started in 2004 under Mayor Richard M. Daley and schools chief Arne Duncan, now the U.S. secretary of education.

Closures have gained additional attention recently, after the Obama administration’s rewrite of the School Improvement Grant program. The $535 million initiative lists closing schools as one of four options for revamping the lowest-performing 5 percent of schools nationally.

Union leaders indicated that, with the contract battle behind them, they are gearing up for another one on school closings.

“On some of these fights, the school closings and whatnot, I think we’re going to see more action,” Mr. Sharkey said. “The union feels like we’re just getting warmed up on that one.”

Vol. 32, Issue 05, Pages 1,13

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