RAHM VOWS $ 80M FOR CPS SECURITY COSTS
Plans to cover annual expense without‘ a city wide tax increase’
Mayor Rahm Emanuel agreed Tuesday to cover up to $ 80 million in security costs for the Chicago Public Schools and predicted that he could assume that annual burden “without a citywide tax increase.”
The Chicago Public Schools budget assumed $ 269 million in help from the city, but that was before a hard- fought school funding compromise that will provide a $ 450 million windfall for CPS.
The bill signed by Gov. Bruce Rauner also authorizes a $ 125 million property- tax increase for teacher pensions — on top of the $ 250 million increase imposed last year.
Sources said all of those measures have reduced the remaining gap that must be filled to roughly $ 125 million.
On Tuesday, the Emanuel administration disclosed plans to fill that hole without “a citywide tax increase.”
The Chicago Sun- Times has reported for months that Emanuel was considering raising taxes on downtown businesses, high networth individuals or a combination to put CPS on solid financial footing.
But the Springfield windfall let the mayor and aldermen off the hook.
“With historic school funding reform now the law in Illinois, and with the state of Illinois now covering some of the costs of Chicago teacher pensions for the first time ever, CPS’ financial outlook has improved dramatically,” Emanuel’s communications director Adam Collins wrote in an email.
“While the final numbers are still being run from the bill, the city will build into its 2018 budget support for $ 70- 80 million in CPS school security costs. The city will work with CPS to eliminate the remaining gap, which is between $ 40-$ 50M, in the weeks and months to come though we fully expect CPS will see savings from interest and through refinancing debt. CPS will also continue to make further administrative efficiencies such as procurement rebates and additional Medicaid revenue.”
In a follow- up phone call, Collins refused to say how a city grappling with its own $ 114.2 million shortfall that does not factor in the steep cost of a police hiring surge, police reform and new contracts for 90 percent of all city employees could assume another $ 80 million in security costs.
But, he said, “Overall, the city budget will be balanced without a citywide tax increase.”
Other sources said the $ 80 million in security costs were likely to come from the windfall generated by Emanuel’s plan to refinance up to $ 3 billion in debt in a way that could dramatically reduce interest rates.
On Wednesday, Emanuel plans to formally introduce his plan to take advantage of the new financing vehicle authorized by the General Assembly.
The deal that ended the marathon state budget stalemate authorized Chicago to set up a “specialpurpose corporation” as a vehicle to borrow money to finance city projects.
The Emanuel administration intends to put state sales tax receipts into that corporation, then borrow against it at a dramatically reduced interest rate — anywhere from 1.75 percentage points to 3 percentage points lower than Chicago taxpayers pay now.
The decision to assume up to $ 80 million in CPS security costs marks an abrupt about- face on the issue for Emanuel.
From 2009- 2011, CPS paid the Chicago Police Department $ 8 million annually to station two police officers at every high school for the eight- hour school day. That broke down to roughly $ 80,000 per school.
Former CPS Chief Administrative Officer Tim Cawley called it a “sweet deal” that did not reflect the actual cost of police services and supervision that, for years, approached $ 25 million or roughly $ 250,000 per high school.
Shortly after taking office, Emanuel stripped teachers of a previously negotiated, 4 percent pay raise and used the $ 80 million in savings to pay the Chicago Police Department retroactively, going back to 2009.
That helped the mayor solve the city’s budget crisis because it was roughly $ 70 million more than CPS had originally agreed to reimburse the city for police services in schools. “It’s the right thing to do. We owe them,” Cawley said at the time.
The increase in costs prompted CPS tomore closely examine whether it needed two police officers in every high school all day long.
“WITH HISTORIC SCHOOL FUNDING REFORM NOWTHE LAWIN ILLINOIS, AND WITH THE STATE OF ILLINOIS NOW COVERING SOME OF THE COSTS OF CHICAGO TEACHER PENSIONS FOR THE FIRST TIME EVER, CPS’ FINANCIAL OUTLOOK HAS IMPROVED DRAMATICALLY.” ADAM COLLINS, Emanuel’s communications director