A group of activists is charging that the recent credit downgrade of city agencies, including and most recently CPS, is baseless.
The ReFund America Project, an organization supported by the Roosevelt Institute that is studying how the nation’s financial crisis is affecting cities, issued a report that accuses financial institutions of driving an “austerity” agenda.
Saqib Bhatti, director of ReFund America, was joined at a press conference by the Grassroots Collaborative, the Chicago Teachers Union’s Jackson Potter and other activists in releasing the report.
“These ratings allow working people to be thrown under the bus and let billionaires off the hook,” Bhatti said. “These austerity measures are not a necessity. They are a political choice.”
The downgrade of CPS’ credit rating by Fitch last week might force the district to pay $263 million in termination penalties because of interest-rate “swaps.” Grassroots Collaborative Executive Director Amisha Patel thinks Mayor Rahm Emanuel, instead of negotiating payment or any “back-room deals with the banks,” should instead sue the banks for misrepresenting the risks.
The report suggests that the city recover losses from financial deals, reduce financial fees across the board by 20 percent, bring investment management in-house for pension funds and end tax subsidies and tax breaks.
2. Debt and bond problems… Problems with the interest-rate swaps and other financial deals were brought to light by the Chicago Teachers Union and a Chicago Tribune investigation.
The report by the ReFund America Project reveals another deal. It says that CPS took out three capital bonds totaling $666 million in the late 1990s, for which the district will wind up paying $2.1 billion back. That is 216 percent more than they originally took out.
These bonds, known as capital appreciation bonds, allow borrowers not to pay anything for a period of time, sometimes until the bond matures. But at the end, the government entity winds up paying a huge amount as the principal grows and the high interest rate payments are compounded. According to the ReFund America report, California State Treasurer Bill Lockyer compared them to payday loans.
Knowing what bad deals CPS has gotten into in the past, it is worth paying attention as the district sells more debt. Bloomberg reports that for the first time in two years CPS is selling debt and bonds. In addition to selling debt and securities over the last month, CPS will issue about $77 million in fixed-rate bonds to pay for capital work, including air conditioning and upgrading classrooms.
3. Fight for $15 rally … The CTU called on CPS to institute a $15 per hour minimum wage – and require all subcontractors to follow suit. During a press conference before Wednesday’s Board of Education meeting, CTU Vice President Jesse Sharkey said there are “hundreds if not thousands” of Safe Passage Workers who make less than $15 per hour. Sharkey said the issue is critical because many of these subcontracted workers are parents of CPS students, and their low salaries make it challenging to “provide students with the environment necessary for good learning.”
Cook County Commissioner and mayoral challenger Jesus “Chuy” Garcia also made a brief appearance to voice his support for the CTU’s call for a $15 minimum wage. Last fall, Mayor Rahm Emanuel successfully pushed through a graduated hourly wage increase for city workers — and subcontracted workers — that would eventually raise wages from $8.25 per hour today to $13 per hour by 2019. The CPS board passed a similar measure in December.
On a related note, a group of janitors and SEIU Local 1 activists also spoke about labor issues before and during the board meeting. They want CPS to revisit its decision to contract out cleaning services to Aramark and SodexoMAGIC. Janitors say that they have been overworked since Aramark laid off more than 200 employees last fall. Last week the Chicago Principals and Administrators Association released a survey indicating that nine out of 10 principals thought their schools were dirtier now than prior to the privatization of custodial services.
4. In other board news … Ald. Joe Moreno and a group of parents, teachers and students from Wells Community Academy High School showed up to Wednesday’s meeting to ask for a remedy to a complicated and tragic problem. The school has no athletic field, but activists had proudly secured about half of the needed $2.5 million to build a multi-use turf field: $1 million from the Cal Ripken Senior Foundation, and another $150,000 from the ward’s capital fund, the Sun-Times reported. The activists hoped CPS might kick in the other half of the money, and were shocked to learn that the project would need to follow strict procurement rules — which could cost twice as much — or else raise all the cash themselves.
In the meantime, the foundation decided to put its money elsewhere, leaving Wells with no field and significantly less money. At Wednesday’s meeting, one student begged board members to reconsider: “Wells needs this field. Please don’t shut us out.” Board President David Vitale agreed to set up a meeting with Moreno and the activists in the coming week to discuss the problem.
5. Taking off…. Over- testing has driven LaSalle Language Academy Principal Elizabeth Heurtefeu to tell her local school council that she does not want her contract renewed at the end of this year, according to DNAinfo. With her school having to administer the PARCC this year, Heurtefeu says she came to the conclusion that the district no longer aligned with her values. “I’m not against accountability. I think it’s needed, but the way to measure it is nuanced,” she told DNAinfo. “Each time the children take a test, they don’t receive instruction.” Heutefeu has led the top-rated magnet school for eight years. She also has worked in Paris where students are tested every three years.
Also, the Chicago Sun Times had a story this week about how schools are fitting PARCC into their schedules. One way they are doing it is by having students skip art, music and other “specials.” Pulaski IB School had to postpone its spelling bee. Another school has been having students sit in classrooms and read rather than walk in the hallway for gym because hallway noise can be disruptive.