School funding bill seen as giving Chicago more room to deny, delay financial woes
The recently passed school funding legislation has given Chicago another shovel to dig itself deeper into debt, the founder of the financial news website WirePoints contends.
According to the Chicago Tribune, the Chicago Board of Education may now increase property taxes significantly in order to cover the cost of the Chicago Teachers Pension Fund (CTPF). Chicagoans already saw an increase of $272 million this year but now face an additional $120 million this year and potentially $147.9 million in 2018, depending on what the Chicago Public Schools (CPS) district wants to do.
Mark Glennon of WirePoints argues that a broken system can't be fixed through more taxation.
“Insolvencies have to be dealt with quickly and comprehensively or else the problems compound,” Glennon told the Chicago City Wire. “But for Chicago, denial, delay, extending and pretending are the rules.”
According to the Tribune, the increases for CPS would be in addition to already record high property tax increases that are being used to cover contributions to police officers’ and firefighters’ pensions in the amount of $543 million.
“There’s no long-term solution without reducing debt, including unfunded pension liabilities, and that means bankruptcy,” Glennon said. “If you think that’s extreme, ask why nobody — nobody — has laid out any financial scenario for putting the city on a sustainable track.”
Though grave in his assessment, Glennon’s words cut deep, especially given that CPS teachers’ salaries have increased by more than 50 percent since 2007 and CTPF will be doling out 85 percent of its asset base over the next five years.
“The new state money for CPS, which now reportedly could be $450 million per year, plus new taxes, certainly could keep CPS afloat longer — perhaps indefinitely, but you can’t look at CPS as a silo unto itself,” Glennon said, listing Cook County, the Park District and the Metropolitan Water District as examples of fiscal irresponsibility.
“They are all bleeding red and insolvent because if you include pension liabilities, you have to look at it all on a consolidated basis, and that’s when the numbers become insurmountable,” Glennon said. “Tax increases large enough to fix it are unthinkable, which is why nobody puts that solution on the table with real numbers.”
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