MEDIA WATCH: How many ways can Crain's Chicago Business get one story wrong?

Recently, Crain's Chicago Business (May 3, 2010) did one of its puff pieces about Chicago Public Schools' new "Chief Financial Officer," a woman named Diane Ferguson. According to Crain's there is something special about Ferguson's having (a) attended the posh Groton Prep School, (b) gotten an MBA at Northwestern, (c) worked at Sara Lee and "seven other corporations", and (d) doesn't want to propose a tax increase for CPS that makes her uniquely qualified to become the CFO of CPS. Crain's also thought that the best photograph of the Chief Financial Officer would be to pose her on a school playlot swinging on a swing.

The new "Chief Financial Officer" of Chicago's Public Schools, Diana Ferguson, has been absent from most Board of Education meetings since she was appointed to her $205,000 per year job by Ron Huberman recently, but she did make it to the February 2010 Board meeting (Ferguson is above, on the right). Despite repeated claims by Ron Huberman that CPS is facing a massive "deficit", Ferguson has not been called upon to do any of the now famous Power Point presentations that Huberman has done at the Board. Others in the above photograph are Greg Minniefield (now gone from CPS), James Bebley (Deputy Corporation Counsel), and Christina Herzog, who served as "Acting CFO" until an executive search firm turned up Ferguson, who had previously worked in corporate America for outfits like Sara Lee. Substance photo by George N. Schmidt.Let's do a few fact checks. First, Ferguson's pay increase, over her predecessor (Pedro Martinez was the last person to hold the full title "Chief Financial Officer" at CPS) is between 20 percent and 25 percent. According to the CPS Position File for December 2008 (the month before Ron Huberman was appointed CEO), Pedro Martinez was budgeted at $165,000 as "Chief Financial Officer." That amount increased in the FT 2010 budget to $174,000 (and Martinez was transferred from the CFO job to the job of "Chief Area Officer" for reasons that never appeared in the public record). Either way, the $205,000 salary Ron Huberman and the Board awarded Ferguson is a lot more than the old salary budgeted for the CFO of CPS.

Diana Lauber told Substance that the main point she made to Crain's was that CPS needed increased taxes.

But read the Crain's story first:

CRAIN'S ON FERGUSON (By Steven R. Strahler May 03, 2010)

As new CFO, Diana Ferguson confronts the Chicago Public Schools' money woes

Four years ago, the Chief Financial Officer (CFO) of Chicago's public schools John Maiorca (above, right, at the April 2006 meeting of the Chicago Board of Education) was paid $143,000 per year. When Maiorca retired and was replaced by budget director Pedro Martinez (second from right, above) in 2007, the CFO's salary went up to $165,000 per year. In August 2009, Ron Huberman shifted Martinez from the CFO position to one of the newly created "Chief Area Officer" jobs — at $174,000 per year. Martinez lasted a couple of months as a CAO, then left town for another job in another state. Crain's Chicago Business didn't even try to ask why Diana Ferguson, with no experience of training in educational finances, was worth $205,000 per year when she was hired a few months after Martinez left town. But the Crain's May 3, 2010 story on Ferguson repeated the Big Lie being told in Chicago by Ron Huberman that the school system was facing a "deficit" that might be $1 billion sort of maybe. Substance photo by George N. Schmidt.Like FDR, Averell Harriman and Dean Acheson, Diana Ferguson went to Groton — a member of the second class at the exclusive Massachusetts prep school to admit women.

The Hyde Park native now attends Chicago Public Schools, where as the new chief financial officer she confronts persistent money woes, topped by a projected $600-million deficit and growing debt obligations.

She has a corner office, but the frayed corridors and $205,000 salary are a comedown from her private-sector progression through Sara Lee Corp. and seven other companies.

"I wouldn't have pulled (this job) out of a hat, but it resonated," the Yale grad and Kellogg MBA says. She was out of work when a recruiter called last fall.

Within 18 months after Richard M. Daley declared at a July 2008 press conference that CPS finances were in such good shape that there was no need for a property tax increase in Chicago (even the modest increase that would have taken CPS to the "cap"), CPS finances were supposedly in disarray — but Daley had seen to it that all of the official in the above photograph were gone, replaced by those who knew nothing about public education or public school finances. Above, standing behind Daley in July 2008 were (left to right) Chief Executive Officer Arne Duncan, Chief Financial Officer Pedro Martinez, Budget Director Beth Swanson, and Chief Administrative Officer. Substance photo by George N. Schmidt. Rod Estvan, education policy analyst at Access Living and a critic of CPS' budget process, says Ms. Ferguson needs to apply corporate-style cost-benefit scrutiny to the 680-school, 50,000-employee bureaucracy. "She has many of the right contacts to shake things up," he says.

Next school year's projected budget deficit had been $1 billion before state-legislated changes in pension obligations trimmed it by 40%. While long-term contracts with Office Depot Inc. and other vendors have been renegotiated, labor costs accounting for 69% of the $6-billion budget make further deficit reductions difficult.

"There are not a lot of levers to pull," Ms. Ferguson acknowledges.

CPS has no intention of reopening the teachers' contract, lobbying for a state income tax increase or seeking changes in the city's revenue-robbing tax-increment financing program, she says.

Diana Lauber, a veteran CPS watchdog, says, "I don't see any solutions for them other than drastic cutting." 


May 8, 2010 at 9:33 AM

By: Jim Vail


Who is Diana Lauber? A veteran CPS watchdog?

May 9, 2010 at 12:48 PM

By: George N. Schmidt

Lauber tried to correct Crain's

Diana Lauber, who did CPS budget analysis for the Citizens Schools Committee, then for the Cross City Campaign, told me, as I quoted her above, that she told Crain's that CPS needed a tax increase, and that after that there might have to be discussion of cuts. She also said she had contacted Crain's about that, and I'm hoping she'll post her own comment here, since Crain's deliberately misquoted her.

For nearly 20 years, Diana Lauber and others studied the CPS budget and testified on it at the annual budget hearings. One of the last times they testified was in 2007, when they criticized that year's budget as "murky" and repeated their demand that CPS finances show more transparency, not less.

The following year, Chicago's rich people "defunded" the Cross City Campaign (reportedly, on a suggestion from Mayor Daley and Arne Duncan).

May 11, 2010 at 12:05 AM

By: Diana Lauber


Right, George. What I said was that of course we need a tax increase otherwise I didn't see any solutions other than drastic cuts.

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