Mayor Emanuel Wants The City To Buy Chicago Public Schools Debt
By Stephen Gossett in News on Jun 27, 2016 5:18PM
(Photo by Chip Somodevilla/Getty Images)
With prospects of a state-funded bailout for Chicago Public Schools dim amid the political stalemate in Springfield, Mayor Rahm Emanuel has asked aldermen to allow the city to lend cash to CPS.
Schools chief Forest Claypool has stated that schools might not open on time this fall if the state fails to pass a budget that provides funding for the district.
Emanuel's proposal would let the city buy debt from CPS and other city agencies, "no matter the creditworthiness of that debt," according to the Tribune. But administration aides insist the move is not a stopgap funding mechanism. "That's not what's happening," city spokeswoman Molly Poppe told the Tribune. "This is not some contingency plan or bailout for CPS." They claim it's simply an attempt to broaden the treasurer's ability to purchase debt.
Alexandra Sims, senior adviser to Treasurer Kurt Summers, told the Tribune that the change would benefit the city:
"This change means that our sister agencies would no longer be treated any differently from an investment perspective than the city, as is commonplace throughout the country. The city has always had the ability to invest in municipal and state bonds. This expands and allows us to invest in the city and all sister agencies as part of the treasurer's plan to invest in Chicago."
Still, the timing is certainly curious.
Gov. Bruce Rauner continues to suggest property-tax increases as a viable funding option for CPS. (Chicago homeowners face a 13 percent property-tax hike this year, as readers may already be painfully aware.) Rauner has also mentioned the district filing bankruptcy as a potential part of the solution—which, needless to say, could get a little ugly.
As the Trib points out, Chicago has to be mindful of its own, um, suboptimal credit standing when considering a move such as the debt purchase. The city's credit rating was downgraded to "junk" status in May and can nary afford another hit.
Chicagoist has reached out to the Chicago Teachers Union, which has lobbied for Emanuel and CPS to propose a plan beyond state funds to finance the district. We will update this post accordingly.