Chicago Teachers Union leaders have repeatedly warned about the district’s high-risk financial dealings. Now, the Chicago Tribune weighs in with a story on “auction rate” swaps that will cost the district about $100 million more than it would have using traditional, fixed-rate bonds.
The story — part of a series that continues this week — says that financial advisors did not clearly spell out the financial risks, at least according to the documents the district turned over after the newspaper hired attorneys. The interest rate swaps and the auction rate swaps are part of the same series of deals, says Saqib Bhatti, a fellow at the Roosevelt Institute who has been providing information to the CTU about the swaps.
In fact, the Tribune has nifty little videos explaining how these deals work. So far, though, the Tribune hasn’t mentioned that the CTU has been harping on these deals for years, though Bhatti says he was interviewed by the reporters.
In an interview with Catalyst Chicago, Bhatti says that it is clear that the banks misled district officials and that they could join other government agencies who have sued over them. “It is clear that CPS dove in head-first and went deeper than other borrowers,” Bhatti says. “Now that we can see what happened we need to try to get out of these deals.”
The district disagrees with the Tribune’s analysis, and the main financial advisor highlighted in the article accused the reporters of singling her out because she’s a woman. David Vitale, a top district administrator at the time the debt was approved, championed the complex financing method and told reporters he understood the risks. “I am not a neophyte,” he said.
What is really troubling to Bhatti is that CPS hired an outside firm to do an analysis of these deals to justify getting into them, rather than to consider the options for getting out of them.
2. More PARCC testing backlash The Illinois State Board of Education (ISBE) hasn’t budged on its refusal to delay the new Common Core standardized test this spring, despite parents’ and CPS officials’ requests. In fact, state Superintendent Chris Koch recently reminded district officials that “opting out of the PARCC is not an option.”
But a Sun-Times story points out that at least six other states do allow parents to opt out. And “even more remain mum when parents do so” including New York City, where thousands of children refused to take their annual state test last year with no repercussions.
It’s unclear how or whether governor-elect Bruce Rauner will address parents’ concerns about the PARCC and over-testing. As governor, Rauner will appoint new ISBE members who share his vision on education policy — and who will be responsible for hiring a schools chief. Still, if the new governor decides to side with parent groups, delaying the PARCC could come too late in the school year and throw districts’ testing calendars into upheaval.
Chicago isn’t alone in concerns about the PARCC. The New York Times this weekend reported on how school officials across the country are responding to the pushback from parents on over-testing. Meanwhile, a survey by the Center on Education Policy found that 75 percent of 187 school system leaders who responded “said they face either major or minor challenges [with the PARCC], including a lack of computers with adequate processing speed, bandwidth and personnel who can handle technical problems during testing,” according to a Washington Post story.
3. What will Rauner do? The results of a non-binding referendum on the ballot last week showed that more than 74 percent of voters support the idea of providing more money to poor students. But what is unclear is how they want to distribute that money to students.
Senate Bill 16 would redistribute money from wealthy school districts to poor ones. But Rauner said during the campaign that he would not support the bill, which passed the Senate and which House Democrats have been meeting about for the past few months. Rauner said he did think the education funding formula should change, but did not spell out specifics. Democrats could try to push it through during the veto session, but State Rep. Linda Chapa LaVia said she likely won’t bring it up until the new January session.
According to the Illinois Review, a conservative website, 120 superintendents are calling on Rauner to support SB 16. Two of them mentioned are Peoria and Elgin. But several school boards, including two in Evanston, have come out against it.
Need help understanding SB16? Catalyst publisher Linda Lenz will moderate a forum on the bill this Tuesday afternoon at the Union League Club of Chicago. Speakers include: Andrea Zopp, a CPS school board member and president of the Chicago Urban League; Robin Steans, executive director of Advance Illinois; State Sen. Daniel Biss; Ralph Martire, executive director of the Center for Tax and Budget Accountability; Dr. Diane Rutledge, executive director of the Large Unit District Association; and Juan Salgado of Instituto del Progreso Latino.
4. Education policy under the GOP. Illinois isn’t the only place that could see significant changes in education policy under new Republican leadership. Come January, Republicans will be in the governor’s offices of at least 31 states — up from the current 28, according to a story in Education Week. The winners “could be advocates of school choice programs,” although in many states, like Illinois, Republican governors will still need to battle with a Democratic-controlled legislature.
Still, the elections could provide a particularly strong mandate for governors to expand the reach of charter schools, tax-credit scholarships, and vouchers, says Matt Frendewey, a spokesman for the American Federation for Children, a Washington-based advocacy group that backs such scholarships and vouchers that parents can use to pay private school tuition.
At the federal level, Republicans — who easily took control of the U.S. Senate and increased their majority in the House of Representatives — say that an overhaul of No Child Left Behind and the Higher Education Act is at the top of their agenda, according to another Education Week story. Previously, Republicans have proposed that states test students but not necessarily set achievement goals or intervene in schools that aren’t making progress with particular groups of students. Another proposal would scale back the federal role in K-12 policy.
5. Leadership at The Ounce Just as she’d said during the heated gubernatorial race, Diana Rauner plans to remain in her role as president of the Ounce of Prevention come January, when her husband takes the governor’s office.
The Ounce, a leader in early childhood education, has received more than $123 million in state funding over the past 11 years — making up about a fifth of its budget, according to Crain’s Chicago Business. A spokeswoman for the organization told Crain’s there is no conflict of interest if The Ounce’s president is married to the governor: “The Ounce has received state contracts for decades under administrations of both political parties because of its excellence in high-quality programming and training early-education professionals.”
Still, for weeks, some in Chicago’s early childhood education community have been asking themselves whether it’s appropriate. Few if any would say anything publicly, however, because, as one advocate recently told Catalyst, “You don’t want to make enemies with the wife of the future governor of Illinois.”