CHICAGO (Reuters) - Illinois’ two top Republican legislators said on Wednesday they will introduce legislation soon to let the state take over the cash-strapped Chicago public school system, permit the district to file for municipal bankruptcy and eventually allow for city-wide school board elections.
The plan has the backing of Republican Governor Bruce Rauner, who has embraced allowing local governments facing financial turmoil to file for bankruptcy. But it is strongly opposed by Chicago Mayor Rahm Emanuel, who controls the city’s schools, the Chicago Teachers Union, and by Democratic leaders, who control the legislature.
Senate Minority Leader Christine Radogno and House Minority Leader Jim Durkin, both Republican allies of Rauner, said a new approach is needed to rescue the Chicago Public Schools (CPS)from financial mismanagement and near collapse.
Rauner told reporters Emanuel has failed to address the school district’s fiscal woes over the nearly five years he has been mayor.
”His message to us in state government has been for months, ‘We have a crisis. We need $500 million. We want the state to give it to us.’ That’s not a reasonable message. That’s not a reasonable request,” Rauner said.
The nation’s third-largest school system has a structural budget deficit topping $1 billion and credit ratings that have fallen deep into the “junk” level.
The district’s current budget has a $480 million gap that officials hope to fill with bigger pension funding support from the state. But the plan has become entangled in a state budget stalemate between Rauner and Democrats.
The Republicans’ plan would amend an existing law permitting state oversight of fiscally troubled schools to include CPS and allow for an independent authority to run the district, while making it clear the state is not liable for school debt. Once solvency is regained, an elected school board would take control.
The plan would also open the door to Chapter 9 municipal bankruptcy while protecting general obligation bondholders with a statutory lien.
“The mayor is 100 percent opposed to Governor Rauner’s ‘plan’ to drive CPS bankrupt,” Emanuel spokeswoman Kelley Quinn said in a statement, adding that the state has been shortchanging Chicago students.
House Speaker Michael Madigan rejected the plan, pointing to Michigan’s takeover of the city of Flint, which has led to a health crisis from lead-tainted water.
“The disaster in Flint, Michigan, is a very timely example of how reckless decisions just to save a buck can have devastating consequences on children and families,” Madigan said in a statement.
Senate President John Cullerton, a Chicago Democrat, said the Republicans’ “mean-spirited” plan is not going to happen.
CPS has scheduled an $875 million bond sale for next week, partly to free up revenue for its sagging budget.
Additional reporting by Karen Pierog in Chicago; Editing by Lisa Von Ahn and Matthew Lewis