Republicans in the Illinois legislature are introducing bills to allow the Chicago Public Schools to declare bankruptcy and to place the school system in receivership under state auspices:
Republican legislative leaders on Wednesday are expected to unveil proposals to allow Chicago Public Schools to declare bankruptcy and to put the financially struggling school district under state supervision, sources said Tuesday.
It’s the latest move as Gov. Bruce Rauner and Mayor Rahm Emanuel continue to play the blame game over CPS’ $480 million budget shortfall that threatens layoffs and has led to heavy borrowing to keep the state’s largest school district afloat.
House Republican leader Jim Durkin and Senate Republican leader Christine Radogno are scheduled to unveil the proposals at a Wednesday morning news conference where an adviser said they’ll “introduce legislation pertaining to the fiscal crisis in the city of Chicago and the Chicago Public School system.” That also could include a provision allowing City Hall to declare bankruptcy as well, the source said.
I honestly don’t know what the state could do about the CPS’s problems. Year after year they’ve made promises they’re unable to make good on. The Illinois constitution prevents the CPS from reneging on the pension commitments they’ve made and which, frankly, there’s no way they can live up to.
I think that Gov. Rauner is making an error in drawing fire onto himself about the CPS’s problems and the failure of Illinois legislators to deliver the balanced budget they’re constitutionally required to enact. He should be letting Madigan (Speaker of the Illinois House) and Cullerton (president of the Illinois Senate) take the heat. After all, they’ve got all the power.
If he thinks he’s invulnerable, he’s wrong. The governor is the only elected official in the state who can be recalled. Thank you, Rod Blagojevich.
I suspect Rauner desires to bring the stalemate into public focus, where he will make the point on Madigans duty. Right now there is no heat.
“The Illinois constitution prevents the CPS from reneging on the pension commitments they’ve made and which, frankly, there’s no way they can live up to.”
If that’s the case, then bankruptcy is the most efficient and fair solution. Chicago is a corporation, and if its assets and income are too constrained to responsibly pay its obligations, it’s better that everyone receive a haircut — the sooner the better. Bankruptcy being federal law is not constrained by the Illinois Constitution. The issue is simply that the sovereign state must consent.
What does that consent consist of, and how or who consents, PD.
@Guarneri, a municipality must be authorized by state law to file for bankruptcy relief. That can either mean there is a state statute authorizing the municipality to file, or there is a state law that authorizes some public official to grant permission. Sometimes these authorizing statutes create certain preconditions for the municipality.
In Illinois, there is only a statute authorizing municipalities under 25,000 to file for bankruptcy protection if they meet a stringent test as being a “financially distressed city.”
I think it should be pointed out that so far the Illinois legislature has refused to bail Chicago or the CPS out and, indeed, it enacted a statute requiring both to make payments of a specified size into their respective pension funds.
PD
So I’m confused. With a 25K limit, how, then, does the City of Chicago file?
And getting past that, what state official authorizes simply throwing out the state constitution provision on pensions? Mike Madigan? The Governor. It seems like a do-loop.
In any event, plenty of press today about it. If Rauner wanted to get this off the fence it seems to be working.
An act of the legislature would be required to allow Chicago to file.