With teachers, parents, and administrators grappling over how to close the giant hole in the Chicago Public Schools' budget, tax increment financing has become a recurring issue in the debate.
Yesterday was a tough one for Chicago Public School (CPS) students and parents.
Facing an estimated $427 million FY 2011 deficit, the Chicago Board of Education gave CPS CEO Ron Huberman emergency power to raise class sizes and lay-off almost 3,000 public school teachers. The schools' chief has not agreed to follow through with that plan quite yet. Instead, he's offering a "menu of possible concessions" to the Chicago Teachers Union and its new president-elect, Karen Lewis. Neither side will disclose what's on the list, although Lewis told the Reader's Hunter Clauss that she's hoping to survey her members this summer to find out exactly where they are willing to budge. "These official actions were partly procedural, and partly a way for Huberman and the board to publicly and skillfully back the teachers union into a corner," adds Catalyst's Sarah Karp.
In several print and television interviews yesterday morning, Lewis offered Huberman some alternative ways to trim costs. The new president set her sights on the city's contracts with consultants, which she said cost $300 million per year. She also discussed trimming the central office payroll and eliminating a $60 million program that provides curriculum packages and coaching to high schools. But to get a clear sense of the Daley administration's priorities, and find out where waste might exist, Lewis stressed that the budgeting process needs to be considerably more transparent to teachers and parents alike.
It took repeated Freedom of Information Act requests, for example, for the city to post basic payroll information online. And they've ignored consistent appeals to provide serious internal data on the effect of the city's tax increment financing system (TIF) on schools. From her acceptance speech this weekend (watch it here):
Now, back home here in Chicago, we need to put all the financial details on the table, because teachers got pink-slips this week -- and yet Chicagoans have not seen a clear, transparent and detailed CPS budget. We don’t know the details behind this claimed $600 million deficit, that’s just what we’ve been told.
It’s time for the Board to give citizens all the specifics -- how CPS spends our money, on what and to whom; how the $250 million in TIFs that should go to schools each year are really spent. Chicagoans need to know how charters spend their taxpayer dollars because to date, we have not seen one charter school’s financials. Not one.
CORE ran a clean campaign calling for a clean government. We called for budget transparency and a clear read on how social ills outside the schools impact our classrooms on the inside. Then we can start to change the conversation.
So how exactly does Daley's vast network of TIF districts drain schools of much-needed tax dollars?
If property tax revenue increases in a neighborhood covered by a TIF district, that money is diverted from public schools and other taxing bodies into an off-the-books account controlled exclusively by the Daley administration. According to an analysis carried out last year by Robert Ginsburg and Don Wiener on behalf of SEIU's Illinois Council (which sponsors this website), Chicago's TIF system annually absorbs between $250 million and $300 million in property taxes that would otherwise flow into CPS' coffers. Instead, that money is largely funneled into select city wards, many of which need no help eradicating blight and spurring development (the theoretical goals of TIF).
Lewis isn't the only education stakeholder criticizing how the TIF system burdens the CPS budget. Over the past few months, TIF has become a recurring issue in the city's school reform debate.
- High school students asked Mayor Daley back in March if he has done all he can with local resources to blunt the impact of state funding cuts and declining tax revenues.
- When 4,000 Chicago Public School teachers rallied outside of CPS headquarters in late May, protesters we talked to suggested (unprompted by us) that administrators redirect TIF resources into schools.
- The Raise Your Hand coalition, a burgeoning group of parents representing over 250 schools in Chicago, has asked Mayor Daley's office for a meeting to discuss the district's multi-million dollar deficit and its use of TIF funds. (At a protest tomorrow, they will call on the city to "[cease] the diversion of more than $275 million annually in CPS property taxes away from education to TIF districts." See our update below for more details.)
CPS Chief Financial Officer Diana Ferguson told Catalyst yesterday that TIF money is reserved for capital construction projects. "[TIF] is a distraction," she added, "because it is not going to help our operating budget."
Ferguson, however, is missing the point. While the city can't reroute existing TIF dollars into the CPS operating budget, it can make adjustments to the TIF system that could provide both immediate and long-term relief for cash-starved taxing bodies in Chicago. (We provided a few suggestions to this effect last summer. And Ald. Tom Allen offered some ideas of his own in December.)
Furthermore, Mayor Daley's habit of relying on TIF for school construction -- instead of budgeting for it with general revenue funds -- distorts the original intention of the development tool and gives the administration far too much control over which wards see improvements.
During his remarks yesterday, Huberman did not mention TIF reform as one way to alleviate the fiscal pressure on CPS. But if education reformers continue to make their case as negotiations drag on into the summer, he might not be able to ignore it.
UPDATE (3:58 p.m.): The Reader's Ben Joravksy published a related article on the Raise Your Hand coalition this afternoon. Here are a few more specifics about how the parents want to see the TIF statute changed:
If the members of Raise Your Hand get their way, the aldermen and Mayor Daley will be able to keep creating TIF districts, but CPS won't concede its right to tax property in those districts.
In a town—in a school system—that's been under Daley's rule for more than two decades, this is a pretty radical idea. Maybe even revolutionary.
"We're proposing to amend the TIF statue so CPS is taken out of the program," says Goldman. "So that if you have a TIF district you can pull money from the other taxing bodies but not the Chicago Public Schools."
UPDATE 2 (6/17): This morning, we talked to RYH organizer Jonathan Goldman about the group's TIF proposal and shot some video from a protest the coalition held outside Chicago's Thompson Center. Check it out here.
Image via Flickr/BrentLewisPhotography.