A member of the Illinois General Assembly has proposed a bill that would allow Chicago’s deeply troubled public school system to solve its massive projected budget deficit of $1.1 billion by declaring bankruptcy.
The House member is Ron Sandack, a Republican from the pleasant Chicago suburb of Downers Grove, according to WLS-TV.
“This knee jerk reaction to always say ‘let’s just raise taxes,” Sandack told the ABC affiliate. “That’s where a bankruptcy can actually be helpful.”
Sandack’s matter-of-fact recommendation comes as Chicago Public Schools, the third-largest taxpayer-funded school system in the nation, faces a grave and immediate financial crisis.
The bulk of the $1.1 billion deficit is a mammoth $634 million pension payment which will come due on June 30.
Chicago Public Schools doesn’t have enough money to make the payment. It also has no reserve fund.
Sandack’s legislation would allow Chicago Public Schools and other cash-strapped school districts across Illinois to seek Chapter Nine bankruptcy protection. Federal bankruptcy judges could then order debt restructuring, which could include partial or full release from pension obligations.
“We can’t tax our way out of this problem,” Sandack told WLS. “We need additional, broader relief.”
“Some restructuring of that obligation I believe can occur at the federal level under a Chapter Nine construct,” the GOP state congressman added.
Chicago’s powerful teachers union opposes Sandack’s bill.
“Financial crisis is no reason to go back on what basically was a promise made to people who taught the last generation of school children,” Chicago Teachers Union vice president Jesse Sharkey told the station. (RELATED: Chicago Teachers Union Chief Faults ‘Rich White People’ For City’s Education Mess)
Chicago Mayor Rahm Emanuel is also against the massive national embarrassment that would surely result from the bankruptcy his city’s public school system.
“We should not allow the finances to undermine all the educational progress our principals and teachers are making,” Emanuel told WLS. “Because what you don’t want to do is put the system into a process that could actually distract away from the educational things.” (RELATED: Mayor Rahm Was A SHIRTLESS BADASS Who Took On The Nazis In The Summer Of ’78)
The fate of Sandack’s bill awaits a decision by a House committee.
Meanwhile, early Tuesday evening, a couple thousand Chicago Teachers Union members took to the downtown streets of the Windy City — as they frequently do — shouting, hoisting signs and snarling traffic in an effort to get their way in their latest contract dispute. (RELATED: Chicago Teachers Union Blasts Mass Firings Dictated By Post-Strike Contract)
“You have to remember that what you’re fighting for is not just a fair contract, it is the history of fair contracts,” teachers union president Karen Lewis told protesters outside the hideous, 1970s-spaceship-looking Thompson Center, according to the Chicago Tribune. “And if we have a chance, this is it. This is the time where you have to stand up and tell ’em all ‘No, we’re not going to take that.'” (RELATED: Karen Lewis: Improving Failed Schools Full Of Black Kids Is RACIST)
“There’s a lot of money on LaSalle Street, and Chicago claims to be broke,” union delegate and elementary school teacher Adam Geisler told the newspaper, alluding to the banking and legal offices lining the street.
The rally showcased the Chicago Teachers Union’s new slogan: “CPS: Broke on purpose.”
Chants included: “Education is our right. That is why we fight!”
In May 2012, members of the Chicago Teachers Union authorized a strike which occurred in the fall of that year, forcing the city’s children to miss seven days of school.
The bond rating of the Chicago Public Schools has steadily deteriorated over the last decade. For example, while Standard & Poor’s gave CPS an A+ rating in 2006, that rating is now A-. Moody’s Investor Services gave the district an A2 rating in 2006 but the Moody’s rating is now Ba3.
This Moody’s rating of Ba3 means investing in Chicago’s public schools is “speculative” and “subject to substantial credit risk.”