Mayor Pitching Plan To Borrow $389 Million To Bail Out CPS
CHICAGO (CBS) -- Mayor Rahm Emanuel's budget team on Friday confirmed the city will rely on short-term borrowing to keep the Chicago Public Schools running through the end of the school year.
The mayor's office was briefing aldermen on the plan on Friday at City Hall. Emanuel's borrowing plan would allow the district to make a required contribution of more than $700 million to the Chicago Teachers' Pension Fund, due on June 30, while also keeping schools open through the end of the school year on June 20.
CPS has a $129 million budget shortfall, and the state is late in making $467 million in grant payments to the district due to the state's two-year budget impasse.
Chicago Chief Financial Officer Carole Brown said banks have told the Emanuel administration that the city can borrow against 85 percent of the money owed by the state to bail out CPS.
"We think that the borrowing that CPS will put forth will be approximately $389 million, and that will go to fund the shortfall created by the state, and therefore create sufficient money to fund operations through the end of the year, and make the pension payment," she said.
The Chicago Board of Education was expected to vote on the borrowing plan at its next meeting on Wednesday.
As for a long-term plan for addressing the financial crisis at CPS, the mayor has been holding out hope state lawmakers and Gov. Bruce Rauner will come up with a plan to send CPS more money.
"The state of Illinois is the largest deadbeat in the state of Illinois. They're behind on payments not just to the Chicago Public Schools, they're behind on payments to our universities and institutions of higher learning. A number of them now have been downgraded financially to junk, not because the education isn't good, it's because the state's not paying their bills," the mayor said earlier this week. "You know, it's in the constitution that the state of Illinois is supposed to be the primary funder of education. I expect them to live up to their responsibility."
The governor's office responded ahead of the mayor's briefings with aldermen by going on the offensive.
"Instead of engaging with leaders and lawmakers to find solutions to this crisis, the mayor continuously chooses to lay blame on others instead of taking responsibility for his own massive failure of governance," spokeswoman Eleni Demertzis said in an email. "While the mayor is pointing fingers at Springfield, he's running a city with crumbling infrastructure, a school system in crisis and violence that affects every neighborhood in Chicago. It's apparent that this mayor of mismanagement is avoiding responsibility as a means to distract from the failures of his own leadership."