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Board to meet at Westinghouse High School in November... Board to approve $13 million in privatization of 'snow removal services' and return to 'tax anticipation warrants'... Chicago Board of Education will add to massive and expensive privatization at October 22, 2014 meeting

Once again, the Chicago Board of Education will add to its expensive and controversial programs of privatization at its monthly meeting on October 22, 2014. Among the privatization deals on the agenda for the meeting are one that will privatize snow removal services at a cost of more than $13 million. The Board will also vote to turn Hancock High School into a magnet "college prep" high school. This conversion will ignore the fact that the conversion will result in increased segregation on the city's Southwest Side and seems to be on the agenda because certain "Southwest Side" residents refuse to attend school with African American children. The agenda for the Board meeting became available, as required under the Open Meetings Act, 48 hours before the Board meeting. It is 350 pages long in its entirely, and the longest Board Reports (the form an agenda item takes) is nearly 100 pages long, with its appendices.

At the September 2014 meeting of the Chicago Board of Education, among the Board members present were (left to right) Henry Bienen, Mahalia Hines, Jesse Ruiz, and David Vitale. Substance photo by George N. Schmidt.And, for the first time in more than a decade, the Board will vote to hold its monthly meeting outside the current Board headquarters. According to one Communication on the agenda for the meeting, the November 19 meeting of the Chicago Board of Education will be held at Westinghouse High School. It is unclear whether this will become a permanent policy or is just being done because of the chaos of the Board's upcoming move out of its present headquarters at 125 S. Clark St. Prior to the beginning of the Arne Duncan administration, the Board alternated its meetings month after month. One month the meetings would be held in the community, and the next month at CPS headquarters. That practice was ended under Duncan and former Board President Michael Scott.

The Board may also come under scrutiny for its continued apologetics for the big banks, since the Chicago Public Schools has refused despite the possibility of recovering more than $36 million per year to file for arbitration on the interest rate swaps that it entered into illegally when Arne Duncan was the "Chief Executive Officer" of the nation's third largest school system and Richard M. Daley was Chicago's mayor.

But the biggest issues before the Board involve some of the most complex financial details provided to the public in more than a decade. And from the indications in a cursory reading to a nearly 100-page financial proposal, Chicago Public Schools will return to a financial activity that got the school system into major financial trouble in the 1970s and resulted in a 30-year oversight by the Chicago School Finance Authority. On October 22, 2014, Chicago Public Schools will return to the practice of issuing what are called "Tax Anticipation Warrants" as a result of a complex deal with BMO Harris bank. The deal, outline in Board Report 14-1022-__ would require a team of lawyers and financial experts to unravel its full meaning and implications.

When the Board approves 14-1022-PR10, Chicago's public schools will have privatized its snow removal services at a cost of $13.5 million. The Board members routinely approve privatization contracts without ever challenging the claims by CPS officials, most of whom have no educational experience and hold MBA degrees, that such privatizations will improve services and reduce costs. Since May 2014, the massive privatization of school cleaning services under Aramark has caused a mess across the city, but Board members still sit stolidly calm in their faith if the Ayn Randism that creates their privatization ideologies.The Board will also enter into a deal costing CPS more than $13.5 million for "snow removal services" that were once performed at every school by Board of Education custodial workers. That deal, outline in Board Report 14-1022-PR10 -- Authorize a New Agreement with Various Vendors for Snow Removal Services, Ice Melt Products, and on Call Grounds Keeping Services -- commits the Board to pay several contractors a total of $13.5 million over the next three years for work that has traditionally been performed by the schools' own custodial staffs. The negative implications of this particular privatization will likely arise as soon as schools have become dangerous because snow removal has been massively privatized. The Board Report does not indicate who will provide shovels and other snow removal machinery, much of which has been purchased by the schools and was used by CPS workers prior to the current round of massive privatization. As usual, the Board claims that the new reality will save money and improve services, just as it did when it pushed through the Aramark contract for janitorial services in February 2014 without discussion or debate.

Charter schools are also on the agenda, even though supposedly they would not be.

Although the Board has said publicly that it won't add any more charter schools this school year, the fine print is what matters, as usual. One Board Report makes clear that the Board will continue expanding the number of "charter seats" available at the already existing charter schools and so-called "campuses."

The Board has also violated the Open Meetings Act by leaking to the October 21 Chicago Sun-Times that it will be selling its Clark St. property for $28 million. Under Illinois law, certain matters are not supposed to be on the public agenda of the Board--even one that is more than 300 pages long. Real estate matters are one of those. Each month, after public participation, the Board recesses into Closed Session (the motion to go into Closed Session is usually read by Mahalia Hines). On October 21, the Sun-Times reported: "As employees began moving out Monday, Chicago Public Schools confirmed it has found a buyer for its headquarters in a $28 million deal expected to be approved by the Board Wednesday..."



Comments:

October 22, 2014 at 2:37 PM

By: Rod Estvan

the tax anticipation notes

First off I would like to thank George Schmidt about informing the public about CPS Board resolution 14-1022-RS2 that relates to the potential issuance of up to $500 million in property tax anticipation notes on 2014 tax receipts. Not one other educational reporter has examined or mentioned this development, possibly because it is so complex.

George is also totally correct that it was tax anticipation notes or warrants that led to the fiscal collapse of CPS in 1979 when Continental bank completely cut off the CPS line of credit causing the district to shut down due to its inability to pay its employees until a bail out deal was established that in part involved the creation of the Chicago School Finance Authority.

George in 1979 and 1980 wrote a series of very insightful articles on that fiscal crisis of CPS that merit reproduction for a new generation of teachers and parents. It was Georges articles that led me to write my MA thesis on this fiscal collapse of CPS.

In relation to CPS Board resolution 14-1022-RS2 the reason CPS states that it is borrowing against anticipated property tax receipts so that sufficient money will be in the treasury of the School District at all times to meet the ordinary and necessary expenses of the School District. . . (page 8 of the resolution). Let me translate this, CPS is unequivocally stating that it is projecting running so low on cash during the course of the FY15 school year that it will not be able to make its full payroll or pay vendors without speeding up receipt of the property tax revenues.

Many school districts in Illinois do what CPS is proposing and the law provides for it, but no other school district in Illinois also issues bonds against anticipated state aid payments. As an example of this I would recommend readers of Substance look at the $403.9 million in bonds issued last year by going to http://cps.edu/About_CPS/Financial_information/Documents/OS_2013A.pdf

In that document you will read on page 2 the following: The Bonds will be secured by and are payable (i) from Pledged State Aid Revenues, (ii) to the extent that the Pledged State Aid Revenues, are insufficient to pay the debt service on the Bonds, from the ad valorem taxes levied by the Board pursuant to the Bond Resolution, against all of the taxable property in the School district without limitation as to rate or amount . . .

As can be seen from this bond statement CPS at least in theory is double leveraging its property tax receipts in the situation of a failure of the State to make sufficient state aid payments to cover the debt payment on outstanding bonds. In the past when CPS was faced with delayed state payments its property tax receipts were unencumbered, that will no longer be the case.

A careful and ongoing examination should be done by the Chicago Teachers Union and the Chicago Teachers Pension Fund of the receipt of the 2014 tax levy of $2,315,000,000, the amount borrowed against this levy by CPS, and the actual amount of State Aid CPS receives. While I have no doubt CPS believes it has provided sufficient cushion so as to not be in trouble with this new debt, it would be very good for both the CTU and the pension fund to hire their own experts to look carefully at the current account balances and debts on a more real time basis. Since CPS has fiscally collapsed in the past it is important that the basis for its assumptions be tested by highly competent staff who not employees of CPS, but work for its teachers and retirees.

Overall this additional layer of debt simply cant be considered to be a good thing.

Rod Estvan

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