Pending Teachers’ Strike in Chicago Reflects Long and Convoluted Funding Crisis

The Chicago Teachers Union has voted to strike next Tuesday, October 11. The union has not had a contract for over a year, and in threatening to strike, teachers are not only expressing dissatisfaction with the contract offered by Chicago Public Schools but also with years of state funding cuts and financial mismanagement that culminated over the summer in worries that the school district faced bankruptcy. Over 90 percent of teachers participated in the vote that authorized the strike, and of those, 95.6 percent voted to strike.

Here are some of the issues teachers are protesting in the contract itself.  First, during negotiations in years past, teachers agreed to give up salary increases when the District agreed to pay a higher percentage of their pension contributions. But in this contract, reports Sarah Karp for WBEZ News, the salary increases proposed by the district are contingent on teachers giving up what they negotiated in previous years and “paying 7 percent more of the employee contribution into the pension fund.”  Karp explains further: “That… offer would give teachers an 8.73 percent raise over four years, but teachers would pay 7 percent more into their pension fund and between 1.5 percent and 3 percent more for health insurance. Teachers would also get salary increases based on experience and education, called steps and lanes.  Considering the increase into the pension fund and payments to health insurance, steps and lanes would be the mechanism by which most teachers would see an increase in compensation.”  “One of the biggest sticking points for the union is that the offer Chicago Public Schools has made could result in some teachers getting less pay at the end of the contract compared to the beginning.”

But salary and benefits are only part of what teachers are protesting in Chicago. The Sun Times quotes a union spokesperson who explains that the vote “should come as no surprise to the Board, the mayor or parents because educators have been angry about the school-based cuts that have hurt special education students, reduced librarians, counselors, social workers and teachers’ aides, and eliminated thousands of teaching positions.” Significant staff cuts were made over the summer, and then just this week—mid-school-year in early October—the school district laid off another 249 staffers, based on the annual count of students in each building that takes place several weeks after the beginning of school each autumn. While district administrators say teachers can be rearranged across buildings to maintain reasonable class sizes and staffing arrangements, the union charges: “Today’s cuts are the latest round of attacks on children… School budgets are down more than 6 percent this year—a loss of $184 million—on top of years of sacrifice by our students, educators and schools….”

What gets lost in the recent coverage of the pending teachers’ strike is the long-running financial crisis of the Chicago Public Schools. The state went without a budget all of last year, due to Illinois Governor Bruce Rauner’s inflexible commitment to austerity. And there is more:

  • Illinois ranks third from the bottom of the 50 states in the category of school funding fairness in the most recent annual rating of states’ school funding formulas by the Education Law Center. “School Funding Fairness” is defined by the Education Law Center: “This measures the distribution of funding across local districts within a state, relative to student poverty.  The measure shows whether a state provides more or less funding to schools based on their poverty concentration….”  Chicago has a high percentage of students living in deep and concentrated poverty, but the state funding formula does not sufficiently enable the district to support these students.
  • The school district has depended on borrowing for years, most notoriously from its teachers’ pension fund. The teachers’ pension fund has been in crisis, and it is clear that the pension crisis is not the fault of the teachers, who have paid their individual contributions. A year ago, Maureen Kelleher, writing for Catalyst Chicago, explained that it stems from 1995, when the state created mayoral control that included sweeping financial changes: “The biggest revenue shift came from combining several property tax levies—including one earmarked to pay for teacher pensions—into one fund that could be used to pay current operating expenses. That year, $62.2 million was diverted from pension payments to operating expenses.”  And the school district has persistently failed to pay its full contribution to the fund and diverted pension funds for school operating expenses—basically borrowing out of the teachers’ pensions to run the district. In the summer of 2015, Kelleher concluded that unfunded liabilities in the pension fund totaled $10 billion.
  • The school district has encouraged the rapid expansion of charter schools since 2003 when then Superintendent Arne Duncan launched Renaissance 2010 to introduce competition by rapidly expanding charter schools and closing so-called “failing” schools.  Since that time, the opening of new charters has contributed to the public school district’s declining enrollment.
  • Over this past summer Governor Bruce Rauner helped undermine investors’ confidence in the school district when he demanded to take over the district and declare it bankrupt.  Bond ratings declined to junk status, and even though bankruptcy was avoided, the interest the school district must pay on its bonds increased from 6 percent to 7.25 percent.

Sarah Karp reports for WBEZ that the district’s overall financial crisis is a major part of the contract negotiations going on through this last week before the pending strike. One issue seems to be Tax Increment Financing.  Tax Increment Financing deals in many cities allow the increased property tax revenue from a new development to be distributed specifically to fund public infrastructure improvements related to that new development. But apparently in Chicago, Tax Increment Finance funds are “special taxing districts that are used for economic development.”  During current contract negotiations, “The union has argued that some of that money could be used for teacher salaries and also to restore some positions closed due to budget cuts… This year, CPS is slated to get $34 million in TIF money—$50 million less than last year…. The timing of the strike might… be related to the TIF funds.”

While it is difficult to tease out all the threads of crisis braided together in the current contract negotiations, what is clear is that the teachers feel like pawns in a game they cannot possibly win.