Dive Brief:
- According to a Saturday report from the Chicago Sun Times, Chicago Public Schools has spent about $18 million on legal and financial fees for the debt-refinancing and loan programs run since 2011 by Mayor Rahm Emanuel.
- The Sun Times also found that several of the individuals and companies who received those legal or financial fees also donated to Rahm Emanuel's campaign for reelection.
- The news comes amid teacher protests and controversy over the district's decision to lay off over 1,000 employees and cut back on maintenance and transportation due to insufficient funds.
Dive Insight:
Chicago's finances have provoked numerous standoffs between Emanuel and the Chicago Teachers Union, with protests breaking out over his attempts to dodge payments into the teacher pension fund and to overhaul the district's operations. The city's debtor status goes back decades to loans the district began receiving in the 1990s, many of which remain outstanding. When Emmanuel took office, he was tasked with righting that financial status and improving the district's mixed performance. But he has faced controversy and pushback each step along the way, including a bad bond rating that upped the city's interest payments and a state Supreme Court decision that overturned pension reforms.
The latest stage involved making a large pension payment with borrowed dollars and fraught and unfruitful contract negotiations between the district and the teacher union. It's not clear when the school district's financial issues will be resolved or if Emanuel can garner the political support to do much about it, but it seems the current borrowing model may be making the situation worse with added costs and uncertainty.