The leaders of Chicago Public Schools and the Chicago Teachers Union, sharply divided, appear ready to unite around one broad solution to solve the school district’s budget woes: tax increment financing revenue.
Both CPS CEO Pedro Martinez and CTU leadership urged city officials this week to use TIF revenues — property tax money raised to stimulate economic development projects — to help cover major budget pressures in the district, including the cost of non-teacher pension payments and still – Contract under negotiation with teachers.
However, the CPS and CTU proposals differ. Martinez is pressing the City Council to give the school district a massive infusion of surplus funds from TIF districts, while teachers union leaders have added a call for a rapid and near-total end to TIF districts that would face daunting political hurdles to awarding the district an estimated $1 billion annual payout.
“Our school communities cannot afford to return to the cuts, consolidations and closures of the past. The money is there,” Pavlin Yankov, director of research at CTU, said in a press conference on Wednesday.
After Wednesday’s City Council meeting, Mayor Brandon Johnson said he “has always been very clear” that he would provide the school district with surplus TIF. “Whatever we can increase, I have made a commitment,” he said. “These are my values, and this is not something anyone should call me to do.”
The teachers union also faces a new lawsuit filed Wednesday demanding it release an audit that disgruntled members say is needed and long overdue.
The city’s 124 TIF districts are an attractive target for the cash-strapped school district and the union. The districts had collectively raised $1.2 billion by the end of 2023, according to data kept by the city’s Department of Planning and Development. Their total fund balance at the end of the year was more than $3 billion.
But they are also closely guarded by local council members, who rely on quotas in their TIF districts to implement economic development projects in their neighborhoods or repairs to local parks, schools and roads.
While Johnson has also indicated a desire to reduce the city’s dependence on districts — he led a new bond program made possible by allowing several TIFs to expire — he has also supported expanding the Pilsen TIF and using the city’s largest money-making TIF district to finance the conversion of old office buildings Along LaSalle Street to residential projects.
The teachers union called on council members to “remove TIF” from the city at a news conference on LaSalle Street before Wednesday’s council meeting. A group of CTU organizers carried signs calling for a reprioritization of taxpayer dollars and targeting high-powered businesses in the buildings around them — including many of the same buildings that won TIF money from Johnson to convert offices into housing.
The signs say “Silly developers, TIFs are for kids” and “Revenues for recovery.”
CTU’s Yankov stressed the need to act urgently to phase out TIFs as the region faces an “urgent need for resources.” This TIF removal could happen this year and save CPS more than $1 billion, he said.
Meanwhile, Martinez asked aldermen to allow additional surplus TIF to be sent to help CPS cover the disputed $175 million pension payment and $150 million for the new contract with CTU. In briefings with the City Council Women’s Caucus this week, he said a TIF surplus could help the district avoid costly borrowing while school officials continue to advocate for long-term funding solutions in Springfield.
“Without additional funding, CPS will be forced to cover these costs through cuts or additional borrowing that will jeopardize the district’s future financial stability,” Martinez warned, according to slides from Martinez’s presentation to the women’s caucus obtained by the Tribune.
Martinez told the Tribune Wednesday afternoon that he asked Johnson in April for enough TIF sweeps to provide CPS with at least $452 million this year. The amount will require Johnson to declare a record surplus of about $1 billion.
The mayor initially approved a net CPS of about $160 million, Martinez said. Martinez said he and the Board of Education were counting on money when they approved the budget without funding non-teacher pension payments.
“We knew these funding sources already existed,” he said. “We feel there is a reasonable demand.”
Chicago Public Schools CEO Pedro Martinez answers questions about the school board and mayor at the Armstrong School of International Studies on Sept. 30, 2024. (Antonio Perez/Chicago Tribune)
Chicago “freezes” property values within TIF districts, making access to increased values inaccessible to other taxing bodies such as CPS, the Chicago Park District or Cook County.
Martinez estimates that $19 billion in estate value is stuck in TIFs that CPS can’t tax. Without these investment funds, CPS would be able to raise an additional $600 million in annual revenue, according to his presentation. “The district’s inability to access TIF dollars limits our ability to solve the district’s deficit challenges and find a sustainable solution” to pay non-teacher pensions, he said.
But CPS’s access to TIF dollars is more complicated. Over the years, the city has historically attempted to funnel money back to CPS either by disbursing surplus TIF dollars or using tax district funds to pay for school-specific capital improvements within TIF districts.
When a city has a TIF surplus, CPS is the biggest beneficiary. Johnson’s 2024 budget included a record TIF surplus of $433.8 million. Of this amount, the city’s share was $100 million, while CPS’s share was $226 million.
Johnson has not yet provided details on his planned 2025 TIF surplus, and the city typically uses surplus TIF revenue to fill its budget gaps. Johnson expects to reduce the deficit by about $1 billion in next year’s budget.
TIF dollars typically must be spent on specific capital projects within their geographic boundaries. But when the city declares its TIF surplus each year — freeing up money not already allocated to a TIF project or other eligible costs — those funds can be used as a general revenue source.
Aside from the TIF surplus, the city has allocated TIF revenues directly to CPS projects.
Between 1984 and 2019, Chicago spent $1.36 billion in TIF on school-related projects, according to the city’s 2019 annual financial analysis. A large portion came through Chicago’s controversial Modern Schools program. MASC, led by Mayor Richard M. Daley, issued bonds paid for with TIF revenues to pay for the construction or renovation of nearly two dozen school buildings over seven years.
From 2019 on, city officials approved nearly $309 million in TIF spending on school projects, from building new gyms or replacing grass fields with turf to replacing or repairing mechanical systems, plumbing, roofs and windows, according to data maintained by the fund. TIF to invest in the city. Committee.
Former Chicago Schools Bulbeck student John Cruz Barcenas holds a sign during a news conference Wednesday with supporters of a “revenue recovery package” plan that supporters believe will provide greater funding for the city of Chicago and Chicago Public Schools. (Stacey Wescott/Chicago Tribune)
Yankov acknowledged that some temporary investment funds are already obligated to pay for ongoing projects, but said the rest of that money could be transferred to schools. The mayor was actually open to the TIF bonds expiring, “as they should be,” Yankov said. He said that the union calls for “fast-tracking” this gradual cancellation.
While some TIF money was invested in working-class communities, the overwhelming use of TIF was “to create these large-scale developments downtown, adjacent to downtown,” Yankov said.
“In general, when we face a budget crisis, we have to prioritize public services and think about those more structural and long-term ways to achieve this type of system,” Yankov said.
It is unclear whether the plan – which has not been detailed in writing – can succeed.
State law specifies when TIFs must be canceled: If there is no activity or expenditures to advance the area’s redevelopment plan within the first seven years. City policy also allows for early termination of areas based on inactivity, if specific projects are completed and paid for, or if overall redevelopment goals for the area are met.
The proposal would likely have “some very negative consequences,” including potential bond defaults or leaving ongoing projects incomplete, said David Merriman, a professor of urban planning at the University of Illinois Chicago and a national expert on TIF. Some TIF projects could be “cancelled or terminated early,” but should be examined “on a TIF by TIF and project-by-project basis,” he said.
The proposal to end all city TIF funds and sweep up their money “doesn’t seem like a serious public policy proposal,” he said.
When asked at a CTU press conference on Wednesday about the feasibility of phasing out TIF, District 5 School Board candidate Gitto Brown said the city could do so “once there is the political will to do so.”
School board candidate Geto Brown speaks during a press conference regarding the “Revenue Recovery Package” plan before the Chicago City Council meeting on October 9, 2024 in Chicago. (Stacey Wescott/Chicago Tribune)
Commissioner Tara Stamp, CTU’s director of new teacher development who replaced Johnson on the Cook County Board, spoke about how the TIF survey process will help ensure equitable access to school programs throughout Chicago.
“We have a solution, because that’s what teachers do,” she said. “Give the money back to our children. Take it away from the wealthy billionaires who can do it alone.”
The group is suing CTU and demanding an audit
Meanwhile, the Liberty Justice Center on Wednesday filed a lawsuit on behalf of four CTU members, alleging that the union did not comply with its contractual duties to produce its annual audit detailing the union’s finances. The CTU’s last published audit covered the first half of 2019, according to plaintiffs.
“Under the CTU Constitution and Bylaws, Article VI, Section 1(d), the union is required to ‘submit an audited report on the union which will be printed in union publications,’” Dean McGee, senior counsel for educational freedom at the CTU, wrote in an email. October addressed to CTU President Stacy Davis Gates and CTU Financial Secretary Maria Moreno.
Members have been told they can come to the CTU office to view the audit if they wish, McGee told the Tribune.
“In other words, their leadership is telling them that these busy teachers need to take time out of their day, away from teaching students during a weekday to go into the office to view the audit they are contractually entitled to directly from leadership,” McGee said.
A week after receiving the letter, CTU lawyers asked for the plaintiffs’ identities and Gates then summoned them to an all-member meeting and greeting of pension candidates, said school social worker and CTU member Philip Weiss, who is the plaintiff. According to Weiss, Gates framed their request for transparency as part of a “right-wing” effort.
“I’m running for pension trustee. I was chief investment officer,” Weiss said. “I was chief investment officer, and she’s trying to undermine him. … She used this lawsuit as a way to say, ‘Here’s the bad apple in our union.’
CTU blasted the lawsuit as “frivolous” and described it as a “right-wing company allied with Trump” in a statement Wednesday afternoon.
“Filing a lawsuit seeking a remedy that could have been resolved via email is frivolous conduct and the definition of frivolous,” Davis Gates said in the statement. “This lawsuit is not about information they already had access to. It is another inaccurate move by those pushing Trump’s agenda in Illinois.”
Originally Posted: October 9, 2024 at 5:38 p.m
