(Repeats to widen distribution)
By Dave McKinney and Karen Pierog
CHICAGO Oct 10 Chicago's public schools and its
teachers' union make the final push to avert a looming strike on
Tuesday with its success hanging on each side's willingness to
accept unappetizing concessions.
The teachers are asked to ramp up contributions to their
pension fund, a demand the union has already once rejected.
Unions want extra money for teachers from special economic
development districts - a controversial proposal given their
uneven, hard to predict revenue.
The need for hard-to-swallow tradeoffs stems from the dire
state of the nation's third largest school district and a
broader fiscal distress confronting Illinois and Chicago.
The state, the city and the school district have all had
their credit ratings cut to junk, or just above it, and a
political stalemate in the state capital, Springfield, means
Chicago Mayor Rahm Emanuel and the teachers cannot expect any
help from outside.
The impasse and the threat of the strike that would affect
nearly 400,000 students come at a tough time for Emanuel, whose
second term has been marred by deteriorating finances and a
spate of street violence.
Karen Lewis, president of the Chicago Teachers Union, in
2012 handed Emanuel his first major defeat as mayor, leading
teachers into the first strike in a generation and wringing
concessions from the school board.
The union is seeking an additional $200 million in new
revenue, but the Chicago schools have no apparent resources to
offer. The school system, which is independent of the city, had
a $7 million deficit in its operating funds on June 30,
according to a school financial report that has not previously
Chicago Public Schools has increased its cash flow borrowing
but resources remain tight. Pension contributions have tripled
in recent years and the state legislature authorized the school
district to collect an additional $250 million from property
owners to pay pensions.
The Chicago Board of Education, appointed by Emanuel, wants
teachers to increase their pension contributions. Right now,
they contribute 2 percent, with the school board chipping in an
additional 7 percent. But when Lewis floated the idea in
January, her negotiating team rejected it.
With few other options, the teachers are pushing for Emanuel
to allocate most of the surplus revenues generated by nearly 150
special taxing areas, called tax-increment financing districts,
throughout Chicago. Emanuel already allocates just over half of
surplus revenues from the districts to the school system and has
resisted calls to allocate more.
Chicago Teachers Union Vice President Jesse Sharkey, a lead
player in Lewis' negotiating team, said the union was seeking
$200 million more in annual revenue to prevent new staff or
program cuts. "That question of using TIF funds to ward off cuts
and achieve a contract, to me, becomes the central issue of
whether or not we can avoid a strike," Sharkey told Reuters.
Chicago and other cities establish tax-increment financing
districts in economically blighted areas; then as tax revenues
grow due to investment, they distribute the increased revenues
to infrastructure, redevelopment, schools and other purposes.
Yet revenues from such districts vary widely in Chicago
districts vary widely, making them an unreliable financing tool
for the schools, according to a prominent fiscal watchdog.
"No financially responsible government would be using TIFs
to pay for its operational expenses," said Laurence Msall,
president of the Civic Federation, a tax policy and government
The city's TIF districts pumped out $113.6 million in
surpluses so far this year, but in 2011 produced only $40,000 in
surpluses, according to the city.
The strike threat is a big gamble for the union given the
school system's dismal finances, said Jean-Claude Brizard, who
was Chicago schools' CEO during the 2012 and now is a partner at
at educational consulting firm Cross & Joftus.
"I don't see what the CTU will gain with a strike. The
system is broke," he said.
(Reporting By Karen Pierog and Dave McKinney in Chicago,
editing by David Greising and Tomasz Janowski)