Education Week - May 18, 2016 - 17

The district's accelerating financial woes
have in turn meant lower credit ratings and
more and more borrowing, including some via
risky financial transactions that, according
to some analyses, worsened the district's debt
problems. Other cost-saving measures, such
as the closing of 50 schools, did not save cash,
but did much to upset parents.
By February of this year, the district had
to sell $725 million in bonds at a yield of 8.5
percent-an incredibly high rate for a municipal bond-simply to keep schools' doors open.

Photography by Alyssa Schukar for Education Week

'Pension Holidays'
In 1995, under a sort of gentlemen's agreement struck between city and state, Chicago
was permitted to divert a tax levy earmarked
for teacher pensions into its coffers, and to temporarily reduce its annual pension payments.
At the time, the Chicago Teachers Retirement Fund was more than 100 percent
funded, so the thinking was that the district
could use the so-called "pension holidays"
to free up funding for programming. But
the deal was also fundamentally unsound,
critics say-a bit like using savings from a
credit-card balance transfer to open a new
line of credit.
Especially after 2000, City Hall plied the
cash into contracts, school construction and
renovation, and the opening of dozens of charters, largely without a long-term plan for sustaining the costs.
"In retrospect, you could say it might have
been good for the students and education in
the short term, but it violates all the fundamentals of pension finance," said Charles
Burbridge, a former chief financial officer of
the district and now the executive director of
the retirement fund.
Skyrocketing financial markets in the
1990s masked the buildup of potentially huge
teacher-pension legacy liabilities. Then came
the fiscal crises of 2001 and 2008. By 2004,
the system had fallen below the 90-percentfunded mark, triggering larger and larger
annual payments.
Rather than take action then, city and state
officials doubled down. In 2010, they agreed
to another three-year pension holiday. By the
time that ended in 2014, the city's pension
obligation had tripled to more than a tenth
of the budget.

Educators leave, parents lose trust in district
By Denisa R. Superville
& Stephen Sawchuk
Chicago

Pointing Fingers

"In terms of a statewide formula, it kind
of only runs if you put gas in it," said Bruce
Baker, a professor of education at Rutgers
University in New Jersey.
While state financing may be the main
driver of the current crisis, however, two
decades of disastrous financial decisions by
the district's many leaders have also played
a critical role.

Steep Human Costs in Battles
Over Chicago School Funding

Even with the benefit of hindsight, the district's former leaders are hesitant to outline
what they could have done differently.
Many blamed the state, noting that the
1995 legislation establishing mayoral control of the school district also pledged more
state support for pensions, but did not contain a sufficient enforcement mechanism.
State payments to Chicago's teacher-pension system have dwindled to less than $15
million annually.
Obliquely, some suggest that, under Mayor
Richard M. Daley's watch from 1989 to
2011, the city simply spent too much. A 2006
teacher contract, for instance, paid out annual 4 percent raises for four years even as
the pension system fell further into the red.
(A fifth increase was canceled under Daley's
successor, Mayor Rahm Emanuel.)
"There was a pattern of labor agreements
at that time across the city that had that
characteristic," said David Vitale, at the time
an adviser to Chicago schools CEO Arne
Duncan and later the school board president
between 2011 and 2015. "I don't think it was
CPS alone."
Paul Vallas, who was the district's CEO
from 1995 to 2001, put it more bluntly:
"Don't kid yourself. Everything comes from
City Hall."
Even the CTU acknowledges that the relationship between its former leaders and the
Daley administration was cozy and not necessarily focused on sound fiscal practices.
"There's probably a point to be made
there, that as long as the mayor is promising to fund contracts, you look the other
way," Jackson Potter, the CTU's staff director, said of the pension holidays.
That expedient approach, though, also alienated some teachers and helped give way in
2010 to the rise of the union's current leader,
Karen Lewis, who pledged a harder tack.
Some former administrators have remained silent about how their decisions may
have contributed to the district's current fiPAGE 18 >

Tension was running high this spring at
R.H. Lee Elementary School in the city's West
Lawn neighborhood.
Rumors had been swirling that the assistant principal was leaving. The threat of a
teachers' strike loomed. And teachers were
unsure what to do about grades if a strike cut
the school year short.
Alexandra Escobar, the assistant principal,
tearfully confirmed to colleagues assembled
in Lee's media center that she was taking
a job as a principal in a wealthy district in
nearby Highland Park.
It wasn't an opportunity she ever intended
to seek. Escobar got into education over a decade ago to work in urban school systems like
Chicago. But with no end in sight to the district's financial problems, Escobar is banking
her future on a more stable district.
Escobar, 33, is not the only one leaving Lee.
A teacher is retiring at the end of the school
year, earlier than the teacher had planned.
Others are anxious, and Lee's principal, Lisa
Epstein, encouraged them to call the pension
fund to figure out the implications of retiring
this year or later.
Lee Elementary is a microcosm of what's
happening in schools across the city as teachers, principals, students, and parents weigh
their futures in a district teetering on the
edge of financial insolvency.
As the district tries to scrounge up money
to plug a $1 billion structural deficit next
year and find reliable funding for the future,
it's in danger of losing talented professionals:
young educators like Escobar who are unsure
whether to gamble their careers in a system
always verging on running out of money, and
veterans, who are mulling cashing out early
because the year-to-year uncertainty has become too nerve-wracking.
Some parents, too, are searching for stability and packing for the suburbs. Others
are counting the days until their children
graduate. Those who remain ask: Will schools
open on time? Will schools still offer arts and
after-school programs? And, most of all, how
will this never-ending drama affect their chil-

dren's education?
"I feel like I have been hyper-documenting
the Titanic for the last six years," said Wendy
Katten, the director of Raise Your Hand Illinois whose group has been scrutinizing district and state education spending.

Who Is to Blame?
Parents here say there is plenty of blame to
go around: the state, the school district, and,
to a lesser extent, the teachers' union.
Many parents interviewed for this story
said they understand that the state's K-12
funding formula is partially to blame for the
district's predicament, and that they don't
have the appetite for a strike. Still others believe a strike may create an opportunity for
a fresh start.
But some of those same parents also made
one thing clear: If teachers are to strike over
the disputed labor contract, they would be
more likely to side with them, rather than a
city-run school system many don't trust.
"The last thing we want to do is scramble
for child care or have our school year interrupted yet again," said Jeff Jenkins, an activist and a parent on the Local School Council
at John C. Coonley Elementary School in the
city's Lincoln Square neighborhood.
"But a lot of parents know that this is a
marathon, not a sprint," he continued. "Teachers have made a commitment to our families
for the long-term, and when they tell us, 'This
contract is bad. It's bad for the long-term, it
doesn't serve us, and, in turn, it doesn't serve
you and your family,' we tend to trust them."
The distrust of the city's school system can
be traced to numerous factors. There's lingering bitterness from the district's decision in
2013 to close nearly 50 schools, amid widespread protests. Then came the $23 million
in no-bid contracts for professional development for principals that led to the indictment
of former district CEO Barbara Byrd-Bennett.
That the board is appointed by Mayor Rahm
Emanuel is a perennial sticking point.
This yawning divide between the district
and some parents poses a challenge for the
district's CEO Forrest Claypool, who is now
trying to make the case that his team can
PAGE 19 >

Alexandra Escobar, the
assistant principal at R.
H. Lee Elementary
School in Chicago, will
leave the school soon
for a new job in a
nearby suburban school
district. Escobar said
ongoing turmoil and
uncertainty in
Chicago's school
system gave her little
choice but to seek a
position in a school
district with more
stability.

EDUCATION WEEK | May 18, 2016 | www.edweek.org | 17


http://www.edweek.org

Education Week - May 18, 2016

Table of Contents for the Digital Edition of Education Week - May 18, 2016

Education Week - May 18, 2016
Chicago Fiscal Crisis Reaches Boiling Point
Feds to Schools: Don’t Restrict Transgender Access
Interdistrict Enrollment Appealing, Tricky
Top Math Competitions Struggle To Diversify Their Talent Pool
Study Cites Types of Schools With Low Graduation Rates
‘Complex Web’ of Obstacles Hinders Success for Boys of Color
New Orleans Schools Poised For Return to Local Board Oversight
DIGITAL DIRECTIONS: 1-to-1 Laptop Initiatives Boost Student Scores, Study Finds
Many GOP K-12 Policy Hands Cool To Idea of Trump Post
States Eye Data Dashboards as Path to Nuanced Accountability
Combing High-Court Nominee’s Clerkship for K-12 Hints
News in Brief
Report Roundup
Blogs of the Week
Blogs of the Week
Letters
TopSchoolJobs Recruitment Marketplace
BLAIR E. LYBBERT: A Radical Solution to the Dropout Problem
CHARLES J. OGLETREE JR. & KIMBERLY JENKINS ROBINSON: Neglecting the Broken Foundation Of K-12 Funding
DAVID SANTULLI: The Malia Effect
JOHN GOMPERTS: Making Sense Of High School Graduation Rates
Education Week - May 18, 2016 - Top Math Competitions Struggle To Diversify Their Talent Pool
Education Week - May 18, 2016 - 2
Education Week - May 18, 2016 - 3
Education Week - May 18, 2016 - News in Brief
Education Week - May 18, 2016 - Report Roundup
Education Week - May 18, 2016 - Study Cites Types of Schools With Low Graduation Rates
Education Week - May 18, 2016 - 7
Education Week - May 18, 2016 - 8
Education Week - May 18, 2016 - ‘Complex Web’ of Obstacles Hinders Success for Boys of Color
Education Week - May 18, 2016 - New Orleans Schools Poised For Return to Local Board Oversight
Education Week - May 18, 2016 - DIGITAL DIRECTIONS: 1-to-1 Laptop Initiatives Boost Student Scores, Study Finds
Education Week - May 18, 2016 - Blogs of the Week
Education Week - May 18, 2016 - 13
Education Week - May 18, 2016 - 14
Education Week - May 18, 2016 - 15
Education Week - May 18, 2016 - 16
Education Week - May 18, 2016 - 17
Education Week - May 18, 2016 - 18
Education Week - May 18, 2016 - 19
Education Week - May 18, 2016 - States Eye Data Dashboards as Path to Nuanced Accountability
Education Week - May 18, 2016 - 21
Education Week - May 18, 2016 - Blogs of the Week
Education Week - May 18, 2016 - Combing High-Court Nominee’s Clerkship for K-12 Hints
Education Week - May 18, 2016 - 24
Education Week - May 18, 2016 - BLAIR E. LYBBERT: A Radical Solution to the Dropout Problem
Education Week - May 18, 2016 - DAVID SANTULLI: The Malia Effect
Education Week - May 18, 2016 - Letters
Education Week - May 18, 2016 - 28
Education Week - May 18, 2016 - TopSchoolJobs Recruitment Marketplace
Education Week - May 18, 2016 - 30
Education Week - May 18, 2016 - 31
Education Week - May 18, 2016 - JOHN GOMPERTS: Making Sense Of High School Graduation Rates
Education Week - May 18, 2016 - CT1
Education Week - May 18, 2016 - CT2
Education Week - May 18, 2016 - CT3
Education Week - May 18, 2016 - CT4
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