Mayor Rahm Emanuel has finally broken his silence about Chicago Public Schools' financial crisis, saying the district will not be able to make the full pension payment due June 30 without making cuts in the classroom.
Emanuel told the Chicago Sun-Times on Monday that CPS' finances are "at the breaking point" and the district does not have the $634 million needed to pay the Chicago Teachers Pension Fund in full.
“This is the end result of decisions and no decisions made over 20 years. ... While CPS has made great strides academically, they have postponed the impact of the financial situation from the classroom,” the mayor told the Sun-Times.
While the future looks bleak for CPS, there is still a chance someone will bail out the school system in the next seven days. State intervention could be the district's saving grace, but it's unclear if Gov. Bruce Rauner and his cohorts in Springfield will let such a measure pass as they battle for a budget plan to lessen the state's debt.
The governor made it clear in May that Springfield would not bail out Chicago, but if the city's 400,000 public school students are at stake, maybe Rauner will back down on his statement. Furthermore, it could be politically advantageous to help out Chicago's students, thus gaining some support from residents. Last week, the governor aimed to do just that with a post-election TV advertisement that aired in Chicago.
If CPS fails to make the full payment by June 30, it will be forced to make an unauthorized partial payment, a first in the district's history. This move opens up the possibility of a lawsuit or even bankruptcy.
The consulting firm Ernst & Young produced a telling report about CPS' financial situation, which was obtained by the Sun-Times over the weekend. The firm concluded that the district could run out of cash as early as this summer. In addition to being unable to make the pension payment, this critical lack of funds could mean the district will also be unable to pay teachers and make payments on previous debt.
As a result, teachers could be laid off, school programs cut, classrooms enlarged and summers lengthened. CPS' debt status could also be downgraded again, after Moody's already lowered it to junk status in May.
Ernst & Young recommended that City Council approve two property tax hikes to help shoulder the CPS financial burden, but these measures have not yet been proposed or voted on.
“At the right time, we’ll take a look at everything," Emanuel told the Sun-Times. "But we’re not at that point.”