Under Pressure from City Council

Introduction to the Issue

The Chicago Board of Education will be asked Thursday to approve a contract to reimburse the city for a long-disputed $175 million pension payment for non-teaching school employees — but only if the City Council agrees to declare a more than $1 billion tax increment-financing surplus to bail out Chicago Public Schools.

The Proposal and Its Conditions

In a letter to City Council members earlier this week, Board President Sean Harden thanked the majority of alderpersons who twice “expressed support for an unprecedented TIF surplus to help balance both the city and CPS budgets.” The letter reminds alderpersons that the board approved a budget that “commits to paying the District’s portion” of the Municipal Employees and Benefit Fund pension payment “with TIF surplus funds that exceed $379 million, and we are prepared to codify our commitments” in an intergovernmental agreement that “outlines expectations and timeframe.”

The TIF Surplus Requirement

But the letter states, “At a time when public education is under attack and federal resources are in jeopardy, we believe that it is imperative that City Council support the $552.4 million in TIF surplus in Mayor Johnson’s budget proposal that protects the classroom and prioritizes students.” To reach $552.4 million for the CPS share of the TIF surplus — 52% — the total surplus would have to be at least $60 million more than the $1 billion surplus that the mayor talked about declaring. If it’s no more than $1 billion, as Mayor Brandon Johnson described in his budget address, then CPS would only reimburse the city for $140 million after failing to make any pension contribution for the last two years.

Challenges to the Proposal

Even at $1 billion, Johnson’s plan to double last year’s record TIF surplus is no sure thing. It has emerged as one of the most controversial elements of his proposed $16.6 billion 2026 budget. The mayor’s proposed budget is balanced by nearly $600 million in tax and fee increases on businesses and wealthy Chicagoans. On the first day of City Council budget hearings, mayoral allies and critics alike were united in their opposition to a TIF surplus that they fear could derail or, at the very least, delay indefinitely improvements to their local schools, parks and libraries, as well as job-creating economic development projects.

Council Members’ Reactions

On Wednesday, Education Committee Chair Jeanette Taylor (20th) said Johnson will have a hard time getting the 26 votes needed to approve a $1 billion TIF surplus. “Hell no… I am only one of the aldermen [who] is not about to wipe every last one of my TIFs — especially when there was never a conversation with us about what projects are in the queue and what projects are we trying to do before we do that,” Taylor said Wednesday. Taylor said Rules Committee Chair Michelle Harris (8th) was among the most outspoken critics of the $1 billion TIF surplus.

Budget Committee’s Stance

Budget Committee Chair Jason Ervin (28th) declared last week that the mayor’s budget would “not leave this committee without a signed intergovernmental agreement from the Chicago Public Schools related to their pension obligations… We must have that in order to move forward… on this budget process.” Ervin demanded that the city be reimbursed for the entire $175 million pension payment for nonteaching school employees that triggered the mass resignation of the mayor’s appointed school board and the firing of Chicago Public Schools CEO Pedro Martinez.

Conclusion

The situation remains fluid, with the outcome of the vote on the $1 billion TIF surplus hanging in the balance. The city’s budget and the future of Chicago Public Schools hang in the balance, as stakeholders navigate the complex web of financial obligations and political will. As the city moves forward, it will be crucial to find a solution that balances the needs of all parties involved.

FAQs

• Q: What is the amount of the pension payment that CPS is being asked to reimburse?
  A: $175 million for non-teaching school employees.
• Q: What is the condition for CPS to approve the reimbursement contract?
  A: The City Council must agree to declare a more than $1 billion tax increment-financing surplus.
• Q: How much of the TIF surplus is CPS expected to receive if the total surplus is $1 billion?
  A: $552.4 million, which is 52% of the total surplus.
• Q: What are the concerns of City Council members regarding the TIF surplus?
  A: They fear it could derail or delay improvements to local schools, parks, libraries, and job-creating economic development projects.
• Q: What is the next step in the process?
  A: The Chicago Board of Education will be asked to approve a contract to reimburse the city for the pension payment, pending the City Council’s decision on the TIF surplus.