Aldermen want TIF fund surplus sent to schools
by CYRYL JAKUBOWSKI
Northwest Side aldermen said they support a proposed ordinance that would use surplus funds from city tax increment financing districts to alleviate cuts in the Chicago Public Schools system, but some view the initiative as a symbolic gesture of support for teachers who will lose jobs and do not think that the plan will be approved by the City Council.
The school system is laying off 4,226 employees, including 1,036 teachers, 1,077 non-teaching staff, 68 support staff and 194 food service workers at closing schools, 398 tenured teachers, 510 non-tenured teachers, 815 support staff at other schools, and 43 tenured teachers and 85 non-tenured teachers due to changes in enrollment.
In response to the cuts, a group of aldermen who are a part of the City Council’s Progressive Caucus have introduced an ordinance that would used surplus funds in the city’s 165 TIF districts to offset the jobs cuts.
According to Cook County Clerk David Orr, the 2012 TIF district projections show that the city will collect more than $457 million in revenue for the 2012 tax year, an increase of 1 percent over the previous tax year. The ordinance would apply to districts with more than $1 million in funds.
Any declared surplus funds would be returned to the affected bodies.
The assessed value of properties in a TIF district is frozen for property taxing bodies in the district for a period of up to 23 years, and any property taxes resulting from an increase in assessed value is placed into a fund. The funds typically are used to subsidized redevelopment in the district, which is expected to increase property values, but the funds have been used for other purposes.
"We have been cutting the school system for years and at the same time we were telling teachers to produce better results," Alderman John Arena (45th) said. "I want to see some sort of a plan from the mayor for the children, and instead he extended the school day and closed 50 schools and that produced no savings."
Arena said increased property values have led to an increased increment in the districts. "This should be a policy position in that the administration back the surplus at the end of each year back to the community," he said. "Why are we sitting on money that’s not allocated anywhere when we are struggling?
"We have thousands of school kids going into the school system. Let’s get them some capital and resources so that they can have a better education."
"I don’t need to hear any more that Springfield needs to address pension reform," Arena said. "That’s just passing off the buck and kicking the can down the road. The mayor knows how to work Springfield when he chooses to."
Arena said the fact that 32 aldermen who have signed onto the ordinance shows that there is a lot of support for the idea. He said that Emanuel’s plan to use TIF district funds to pay about $33 million of the $173 million cost of building a basketball arena near McCormick Place to be used primarily by DePaul University does not make sense when the city schools are struggling.
Arena said that funds from the Jefferson Park Tax Increment Financing District should be used to retain teachers. "If we have $9 million and there is a surplus, I don’t see a problem with using two or three million to help bring that money back into the community and the schools," he said. "I’m amazed about the mayor’s lack of support for this. He can be a driver in this and transform education by getting the funding there."
Alderman Margaret Laurino (39th) said that tax increment financing districts have been helpful to schools in her ward. Laurino was one of the few Northwest Side aldermen who did not sign onto the ordinance as a co-sponsor.
"We put in an addition to Peterson School and we did other improvements to alleviate overcrowding that certainly wouldn’t have happened if we didn’t have those TIF dollars," Laurino said. "I think that it is a commendable idea, but I think that it is short-sighted and would bring in unintentional consequences that could lead to bigger problems."
Laurino said that "sweeping" the increment districts for funds could affect both business development and property taxes. Referring to the parking meter deal, she said, "Quick fixes can have potential devastating consequences in the long term."
Alderman Tim Cullerton (38th) said that he signed onto the ordinance because the funds could be used to retain teachers. "But frankly, the number of aldermen who have signed on to this don’t have TIFs in their wards," Cullerton said. "Considering the pressure that is being put onto the Board of Education and considering the pressure that is being put on the taxpayers, I saw this as a way to perhaps help."
"Trying to return some of that increment to some of these governing bodies makes sense to me," Cullerton said. "It’s more a gesture than anything else. It’s a gesture that shows that the City Council cares about their problems. My main concern is the tax burden that will be put on the property owners when the CPS increases their tax cap."
Cullerton said that schools in his ward are overcrowded and that education funding has been increasingly reliant on parents contributing to their school. "It’s sad, but there will be a need to have the parents support their locals schools because property taxes are not enough," he said.
Alderman Rey Colon (35th) said that signing onto an ordinance and voting for the ordinance are two different things. "I signed onto it, but I told them that it is not a fix but a quick remedy," Colon said. "I’m not sure that the surplus is what they think it is. It won’t do a tremendous amount of good."
"The TIFs I have in my ward are just now starting to see something get back into it," Colon said. "If you put all the TIFs together, maybe you would be able to get a quarter (of a million) out of them for the schools. My ward doesn’t have a surplus to put in it."
"Everybody talks a good game, but at the end of the day, people who have construction projects that they want from the mayor, all those deals come into play for a vote, and I don’t see that changing." Colon said. "Everybody has signed onto it now, but when it comes time to vote on this, they will not vote against him. It’s more of a symbolic gesture to try to demonize the TIFs to help schools, but the TIFs can be a great tool if they are used right."
Alderman Mary O’Connor (41st) said in a statement that she signed onto the ordinance to help offset the latest round of spending cuts.
"This action would serve only as a temporary infusion of resources," O’Connor said. "It is not a solution to the massive structural deficits plaguing the CPS. We need a multi-pronged approached, and I am committed to working with CPS, the (Chicago Teachers Union) and Mayor Emanuel on doing all that we can to provide students with the resources the needed to earn a well rounded education."
In a letter to his constituents, Alderman Robert Fioretti (2nd), who is a member of the Progressive Caucus, said that in addition to losing teachers, many schools will lose classroom programs such as art, music, language and computer classes and have increased class sizes.
"What was promised by our mayor to be a ‘full school day’ is now missing what many of us expect from a 21st Century public education," Fioretti said. "These cuts and layoff also disproportionately affect low-income and working families, as well African-American and Latino communities."
"As the Progressive Caucus has advocated, instead of divesting from our public education systems, our city should surplus uncommitted TIF funds," Fioretti said. "If we act now and surplus a portion of the annual TIF revenue and re-invest in neighborhood schools, our school funding problems would be partially alleviated. I understand an annual TIF surplus may not be a sustainable solution, but it’s available now and clearly better than shortchanging our children future with draconian cuts."
The Chicago Public Schools is facing a $1 billion deficit that officials say is driven by a $400 million increase in annual teacher pension payments. Officials say that the school system has made budget reductions of about $600 million since 2011 but that the magnitude of the deficit is driving the cuts in staff.
The proposed operating budget for fiscal year 2014 is $5.58 billion. To cover the shortfall in spending, the school system is using $697 million in one-time reserves, $112 million in reductions in central office, operations and administrative spending, $89 million in increased property taxes, a reduction of $68 million in core instruction spending, and $12 million in better-than-expected budget performance in fiscal year 2013.
The school system will spend $15 million on full-day kindergarten, $9 million to expand the "Safe Passages" program, $7 million on International Baccalaureate and Science, Technology, Engineering and Mathematics programs, $700,000 to build five new parent resource centers and $2 million to expand early children education.
Teachers affected by the cuts can reapply for jobs within the school system through a process called "Teacher Quality Pool" to ensure teacher quality in all of the district’s schools. Applicants must complete the selection process to be eligible for hire. More than 60 percent of the district’s displaced teachers historically find employment in other schools before the start of the school year, according to the Chicago Public Schools.
"This budget proposal protects critical investments needed to ensure a high-quality education while reflecting the financial realities of a district facing a $1 billion budget deficit," Chicago Public Schools chief executive officer Barbara Byrd-Bennett said. "By reducing central office, administrative and operations spending, we are minimizing the impact on our schools as best as we can.
"We will continue to fight for every dollar and resource for our district, and we will continue to push for reform in Springfield so that instead of spending hundreds of millions more on a pension system in dire need of reform, we are investing these dollars in our classrooms."