Chicago Public Schools faces some tough decisions in the coming days as the June 30 deadline to make the $634 million teacher pension payment hangs over its head.
Although the deadline is only three weeks away, it is not yet clear whether CPS will be able to make the payment.
So what happens if they can't pay? That's also unclear.
There are a few possible outcomes for CPS, none of which are ideal. First, the Chicago Teachers Pension Fund could sue CPS. Charles Burbridge, the executive director of the pension fund, told the Chicago Tribune he expects to get that payment before such a measure is taken, however.
Another option is for CPS to declare bankruptcy, a plan that Gov. Bruce Rauner might support. If this were to happen, it’s possible – but not likely – that the state would take over the district, bringing CPS to Springfield.
Chicago isn’t the only city whose school district has experienced financial troubles. After Hurricane Katrina, New Orleans’ school system was restructured and the public schools turned into charter schools to generate more money. While Chicago’s problems may not be as severe, that’s one possibility if the situation gets desperate.
Another possibility is simply that CPS will make its payment to the teachers’ pension fund. This has not yet been ruled out, but if they make the payment, they most likely won’t do it until the last minute on June 30.
CPS is embroiled in the battle in Springfield between Rauner and his fiercest opponents in Congress, namely House Speaker Michael Madigan and Senate President John Cullerton. Rauner is in favor of cutting costs, even if that means letting some businesses, governments or even school districts fall to bankruptcy. Madigan and Cullerton, meanwhile, are doing everything they can to shoot down the governor’s budget plan.
Would the state bail out Chicago’s school system if that’s what it came to? Not likely, if Rauner holds true to his word that Illinois will not bail out Chicago, which he told City Council in May.
Moody’s downgraded CPS’ debt status, along with the Chicago Park District, in May, just after the city experienced its own downgrade. Incidentally, the downgrades happened just before the official start of Mayor Rahm Emanuel’s second term, adding ominous overtones to his inaugural ceremony, during which the mayor said few words about the city’s finances.
While there are no answers yet, one of the questions that remains the most unclear is what will happen to the school district’s 400,000 students. Between the end of this school and the start of the next, however, their own futures could be in the balance.