Gov. Rauner: Bankruptcy for CPS Might Be ‘Best Option’ | Chicago Tonight | WTTW

21 Jun

Could Chicago Public Schools declare bankruptcy? Gov. Bruce Rauner on Monday renewed his call for possible bankruptcy protection during a sit-down interview with “Chicago Tonight.”

The governor says bankruptcy may indeed be the best of all options CPS faces now with a billion dollar shortfall. He says he does not support sending hundreds of millions more dollars from the state, and says it would amount to a bailout. He’s proposed an education budget that gives about the same dollar amount to CPS this year as last year. But, he says, the bankruptcy option should be back on the table.

“The mayor has said, we just need a bailout from the state,” the governor said Monday morning during a one-on-one interview at the State of Illinois Building. “Not fair, not appropriate. Really, the mayor has three options: One, get a more affordable teachers’ union contract. But he caved five years ago and I don’t think he’s ready to get a better contract. He could do a tax hike in Chicago. The teachers’ union and some community leaders want that. What I’ve said is we should change state law and allow a financially troubled district to have bankruptcy and go into court and have a judge help them re-organize their debt, their obligations and their contracts. That might be the best option for CPS.”

The state legislature would have to pass a bill allowing that. It is extremely unlikely with a supermajority of Democrats. In the last 60 years, only four school districts have declared bankruptcy, with only two small districts actually following through with it, according to Jim Spiotto with Chapman Strategic Advisors, who has written extensively about on this topic. And in those cases, it was unanimous that there were more problems than solutions with bankruptcy.

“Chapter 9 of a school district is a cloud on the community that likely will prevent progress,” Spiotto concludes. “Experience has shown that Chapter 9 has rarely been used by school districts for good reasons.”

His conclusion: best to solve the problem without it. A CPS spokesperson responded with this statement:

“Rather than invest in our state’s future, Governor Rauner seems hellbent on driving schools to the point of financial ruin – whether it’s CPS, Chicago State, Eastern Illinois, or dozens of local school districts around the state.”

Read More> Gov. Rauner: Bankruptcy for CPS Might Be ‘Best Option’ | Chicago Tonight | WTTW

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