Fiscal impact unclear as governor signs Chicago elected school board bill

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Illinois Gov. J.B. Pritzker signed legislation moving governance of Chicago Public Schools to an elected school board, leaving the fate of $500 million of city financial obligations to the district unsettled.

House Bill 2908 passed the legislature in June over the objections of Mayor Lori Lightfoot. Its sponsors sent it to Pritzker’s desk after promising to address issues over campaign rules and candidate qualifications in a trailer bill that has not yet been considered.

Chicago’s mayor has appointed school board members since 1872.

Illinois Governor J.B. Pritzker, who endorsed an elected Chicago school board during his 2018 campaign, signed a bill to create one.

U.S. Air Force/Senior Airman Jay Grabiec

The new law moves the district from the current seven-member board to a partially-elected board in 2025 with 10 elected members and 11 appointed by the mayor, before a fully elected 21-member board is chosen in the 2026 election and the board seated in 2027.

Every other school board in Illinois is elected.

“I applaud the members of the General Assembly for working together on behalf of their constituents to pass legislation that required compromise and thoughtful deliberation,” Pritzker, who endorsed an elected board during his 2018 campaign, said in a statement announcing the signing without fanfare and ceremony that has accompanied other recent bill signings.

“I look forward to ongoing conversations with the General Assembly and mayor, in particular about the district’s finances, board members’ compensation and campaign rules,” Pritzker said.

Lightfoot, who during her 2019 mayoral campaign endorsed an elected school board, remained staunch in her opposition to the legislation as did the Chicago Civic Federation, both raising qualms over the city’s continued financial links to the district in the absence of a mayoral role.

Many of the district’s municipal bond investors are concerned the change could jeopardize the district’s fiscal progress in recent years.

Lightfoot had pressed to keep some control and she also opposed the proposed size of the board, which would be the largest in the country, on the argument that it would be too “unwieldy.” She also wanted restrictions on the new board’s ability to set its own compensation levels, wanted guardrails on campaign spending to avoid allowing special interest groups like labor too wield too great an influence on the board, and wanted to expand board eligibility to non-citizens.

Some of those issues are to be addressed in the promised trailer bill.

Sponsors rejected the fiscal warnings calling them scare tactics. The legislation calls for the board to conduct an independent financial review of the district and city’s fiscal “entanglements” that will consider the “Chicago board’s ability to operate with the financial resources available as an independent unit of local government,” House sponsor Rep. Delia Ramirez, D-Chicago, said ahead of the vote.

The review will to go to the state board of education before the first elections in 2024 and recommendations about needed legislative changes will go to lawmakers.

“It is time for an elected representative school board,” Ramirez said.

HB 2908 also puts in place a moratorium on school closures and includes language to prevent individuals with conflicts of interest from serving on the board. The legislation is effective June 1, 2022.

The city’s fiscal obligations include $124 million in fiscal 2021 pension contributions for non-teacher school district employees.

The district also this year received $142.3 million from a dedicated property tax levy used to pay for some debt service funding, $39.7 million to fund certain CPS capital projects, $12.5 million in grants for programs such as early childhood development, and $96.9 million in city-declared tax increment financing surplus revenues.

The payment method on some of the sources is deeply entrenched either by a levy or through state statute so would not be easily unwound, although other sources are not. Chicago is the only Illinois municipality that helps cover non-teacher, school employee pension contributions because they participate in the city’s municipal employees’ fund. Chicago is also the only municipality that provides a dedicated property tax levy for debt service for a separate unit of government.

CPS has limited revenue raising options because it operates under state property caps.

Opponents of the bill note that many major cities nationally are governed by their city or a combination of city and state governments.

The governance shift will begin as CPS exhausts its $2.8 billion of federal COVID-19 related relief.

The board on Wednesday unanimously approved the $9.3 billion spending package for the fiscal year that began July 1. It spends down about $1 billion of the district’s federal relief that can be used over the next several years to recover from the COVID-19 pandemic amid warning of a looming fiscal cliff.

“What is ahead of us in a couple of years … is a cliff and while we are not going to get into the numbers here today about what that cliff looks like our responsibility is to make sure that we mitigate as much as possible because the cliff is there. It will be there in a couple years,” board Chairman Miguel del Valle said. “This board is not going to contribute to a process that makes it difficult” for future boards to operate, he said.

Three of the district’s four general obligation ratings remain in junk territory despite upgrades over the last several years.

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