Right before Wednesday’s board meeting, CPS officials announced that they were suspending the contract with SUPES Academy, the company implicated in the federal investigation that led to CEO Barbara Byrd-Bennett taking a leave of absence last week.
CPS has already paid out $12 million of the $20.5 million, three-year contract, set to expire in June 2016.
In other ways, the federal investigation, which came to light a week ago, hung over the board meeting. President David Vitale, who in 2013 said he saw nothing wrong with either the SUPES contract nor the fact that Byrd-Bennett worked for the company, said he meets with the inspector general regularly and agreed an investigation should be done. “There was enough noise around SUPES that it should be looked into,” he said. The inspector general has said that Catalyst’s 2013 article spurred his investigation.
Vitale and interim CEO Jesse Ruiz took pains to argue that the school district is doing well despite the controversy. And while they defended voting for the single-source SUPES contract in 2013, they said they will hire a third-party to do an independent review of the no-bid procurement process.
Ruiz said he will likely remain in the post until the budget is passed and through CTU contract negotiations.
Erika Clark from Parents 4 Teachers invited board members to attend three public forums on the teachers contract. The teachers are asking for things like lower class sizes and an end to preschool testing that is in line with what parents want, she said. She told members that attending the sessions and engaging in a dialogue with parents would go a long way toward repairing trust. “You have zero credibility right now,” she said.
2. Paying the price… Chief Financial Officer Ginger Ostro told the board that the district successfully sold $300 million in general obligation bonds this year. Some had worried that CPS’ leadership controversies and dire financial picture would scare investors off. But Ostro said 100 investors showed up. “It shows investors do have confidence in us to repay our debt,” she said.
Yet financial analysts tell the Sun Times that the interest rate of 5.5 percent is almost double what government agencies are paying. “If we were a good borrower, we would have paid at 3 percent,” said Brian Battle, director of trading for Performance Trust Capital Partners, a Chicago firm that analyzes bonds for investors. “The penalty is big on a percentage basis.”
3. Budget solutions? Ostro also confirmed that CPS is looking at a $1.1 billion budget deficit for next year, two-thirds of which can be attributed to a pension payment of $700 million that is due next year. Ostro and other board members say the solution to the problem lies in Springfield.
But CTU Officer Brunson told members the CTU could help district officials figure out how to find money to fill the hole, including looking to TIF surpluses, unnecessary contracts and taxes.
Also on Wednesday, the Tribune had a lengthy story on the litany of unappealing options available to CPS as it deals with its $1.1 billion deficit. The story notes that Mayor Rahm Emanuel and Gov. Bruce Rauner are “at odds” about what to do, with the mayor asking the state to cover the bulk of CPS’ pension contribution, while Rauner is proposing the possibility of bankruptcy (which isn’t even legal in Illinois).
So what are the options? The Tribune says new revenues could come if Chicago successfully lobbies the state Legislature to increase its tax cap — or if Sen. Andy Manar’s school funding bill passes. That bill hasn’t made it out of committee, though. CPS could also take another pension holiday or borrow its way out of debt, but that approach “really just treats the symptoms,” said Richard Ciccarone, president and CEO of the municipal bond analysis firm Merritt Research Services. Other options are emptying out its rainy day fund and maxing out its credit or using tax-increment financing (TIF) surplus funds.
Short of new revenues, however, none of the options will offer a permanent fix to CPS’ money woes. The district has yet to release school-level budgets — but expect some serious cuts ahead.
4. CTU member to join City Council … By a margin of just 20 votes, Sue Sadlowski Garza defeated incumbent Ald. John Pope in the 10th Ward, DNAinfo reports. On Tuesday, the Board of Election Commissioners counted the final votes — including provisional ballots and final absentee ballots that had yet to trickle in. The final absentee ballots helped Pope narrow the margin, but not enough to defeat the longtime counselor at Jane Addams Elementary School.
The final results are still likely to end up in court, as both sides filed suit for a recount.
Election board spokesman Jim Allen tells DNAinfo that “the declared victor typically drops the suit, forcing the runner-up to proceed as plaintiff. From that point, the election board follows any instructions given by the assigned judge in handling a recount.” Pope’s campaign manager told WBEZ he wasn’t sure yet whether the alderman would go through with the legal challenge.
Catalyst profiled Garza and other Chicago educators who ran for City Council in our Fall Issue. Garza, who had significant backing from CTU and other unions, was one of two educators who made it to the runoffs and the only one to win.
5. CPS whistle blower… So maybe this whole federal investigation will have another consequence: People on the inside will start speaking up. Fox News has an interview with Angela Mason-Johnson, CPS director of staffing services, who has filed a complaint with the Illinois Department of Human Rights and the EEOC claiming that the “Board of Education is a toxic and hostile work environment for African Americans, particularly management employees. CPS maintains a glass ceiling for African-American employees at the Central Office such as myself.”
CPS says they will defend against these accusations.
She also tells Fox that her department has sometimes been told to do improper things like backdate start dates or change job descriptions. At this point, it is unclear what is true and what is not. But in a school system in which most people are nervous about going on the record without an okay from the communications department, it is refreshing to see someone talk on their own accord and we are hoping more folks do so.
Plus one more puzzling item… With massive cuts to human services and higher ed, not to mention an ongoing fiscal crisis, why would the House unanimously pass a resolution targeting the finances of struggling South Side non-profit? That’s the question raised by Progress Illinois in a story on the resolution, passed this week, asking for an audit of the Kenwood-Oakland Community Organization, known as KOCO. Since 2010, KOCO has received a whopping total of $1.3 million in state funding, including money from former Gov. Pat Quinn’s embattled Neighborhood Recovery Initiative. “KOCO’s Executive Director Jawanza Malone said his group was blindsided by the resolution…The resolution is based on a ‘false assertion’ that KOCO received NRI funding, Malone said,” according to the story. Malone said that KOCO served as an employer for youth who were affiliated with the Gary Comer Youth Center, which he said did receive funds from the Initiative. Beyond all this, though, is the question of why KOCO was the only group targeted in the resolution. The story hints at politics in play: the resolution’s co-sponsor, state Rep. Christian Mitchell, is an ally of Ald. Will Burns, who has been at odds with KOCO.