A potential governance change looms large over the junk-rated Chicago Public Schools.
Legislation to move the district to an elected board from the current seven-member panel handpicked by Chicago's mayor has picked up momentum. A
“I am fully committed to passing legislation this year to move to an elected, representative Chicago school board,” Senate President Don Harmon, D-Oak Park, said Friday. Harmon told backers of existing proposals to come up with plan, suggesting starting with a hybrid board of elected and appointed members that would transition to a fully elected board.
“I look forward to putting a plan to get us to a fully elected school board on the governor’s desk this session,” Harmon said. The House previously approved an 21-member elected board.
No matter what happens to Chicago's school board, its executive leadership is about to change.
Chief Executive Office Janice Jackson, who began her CPS career as a teacher, joined Lightfoot Monday to announce she would leave the district after her contract’s June expiration. The chief operating officer and chief education officer are also departing.
CEO turnover — there have been six in 10 years — doesn’t pose a direct threat to the district’s finances but the perception of leadership instability could exacerbate enrollment declines and that would impact the district’s fiscal profile.
The shift to an elected board would be another risk factor.
“It’s already a fragile situation for every major governmental body here, so we can’t take steps backward,” said Illinois-based Richard Ciccarone, president of Merritt Research Services.
Would an elected school board without mayoral accountability to taxpayers “open the purse strings” and return to poor fiscal management that reverses the district’s current upward ratings momentum, Ciccarone said. “New members may not be screaming for financial prudence. It increases uncertainty.”
The district's
Good schools and reducing crime are key components to keeping and attracting families and that contributes to the city’s tax base and fiscal health, so the city’s fiscal fortunes are tied to the shared property tax base, Ciccarone said.
“It makes sense for the mayor to have a seat at the table. There is an intertwining so fiscal mismanagement by one government in the overlapping tax base impacts all of them,” he said.
“I don’t know how an elected board would view its responsibilities to debt,” said Howard Cure, director of municipal bond research at Evercore Wealth Management LLC. “The school district is facing challenges, but it’s made some progress. Changing the governance during an unsettled period where they’ve lost enrollment makes investors nervous.”
The state imposes property tax caps on districts and CPS typically raises its annual levy by the maximum amount, but an elected board could inflict pain on property owners if it opted not to abate the property tax levy that amounts a few hundred dollars annually to cover most of its $8 billion of debt.
The district’s debt is ultimately backed by a general obligation pledge but it pledges an alternative revenue source like state aid to repayment and once debt service for the year is met, the levy is abated. Mayors are loathe to raise property taxes but an elected board might be more willing to take such action.
While critics of an elected board worry over its fiscal priorities, the independence of members is also a concern given special interest groups like the Chicago Teachers Union could gain influence by funding candidacies in low-information elections.
“If they have a lot of control it can lend a bit of chaos," Cure said of the teachers' union, which struck the district in 2019. "There is risk.”
Maintaining some mayoral appointment power also gives the city incentive to support the district financially.
Backers of an elected board counter that the city has skin in the game simply because its fortunes are tied to having a strong public school system and the public lacks a direct voice under mayoral control. They also cite past contract and ethics scandals as evidence mayoral accountability is no panacea to prevent corruption.
The Chicago Civic Federation, which does not take a position on board governance, outlined the arguments for and against in
“Mayoral control can lead to questionable and risky financial practices” the report said, noting that the past leadership had allowed “the systematic underfunding of the teacher pension system, balanced the budget using questionable financial practices and engaged in risky financial borrowing transactions.”
Business groups back a continued mayoral role warning that improvements on academics, testing, and graduation rates are at stake.
“Mayoral leadership also plays an important role for state and city resources,” Kelly Welsh, head of the Civic Committee of the Commercial Club of Chicago wrote in
Competing proposals
The House-approved version calls for a 21-member elected board which Lightfoot opposes citing its size and lack of election criteria.
Lightfoot has countered with a proposal she backs that calls for transitioning to a seven-member board in 2026 with two elected members, with the board increasing in size to 11 in 2028 with three elected members and eight appointed.
During her 2019 campaign, Lightfoot endorsed an elected board, so critics have attacked her current position. Lightfoot has countered that schools would not have reopened for hybrid learning if an elected board was in place, given the acrimony over negotiations with the teachers’ union.
“We need to sit down and compromise,” Lightfoot acknowledged Monday.
Gov. J.B. Pritzker has said he supports an elected board but has not commented on the competing proposals.
All other Illinois district boards are elected. Elected boards account for 90% of districts nationally but a handful of mid-to-large districts led Chicago and New York City fall under some form of mayoral/city control. Former New York Mayor Michael Bloomberg won control of the schools in 2002 and the mayor also appoints the schools’ leader.
The Illinois General Assembly established the Chicago Board of Education in 1872 with an 11-member board appointed by the mayor, according to 2017 Chicago Civic Federation piece. In 1979, the district fiscally collapsed and lost market access. During the 1970s and 1980s it faced multiple teacher strikes in addition to its fiscal crisis and leadership turnover.
State lawmakers created the Chicago School Finance Authority in 1980 to provide fiscal oversight. The 1988 school reform act reorganized the board structure which paved the way for a nominating commission to submit board recommendations to the mayor. In 1995, then Mayor Richard M. Daley won state legislation to give him direct control of the schools with power to appoint the board and CEO.
The district slowly regained its fiscal footing and received new city funding and tax-increment financing help that helped rebuild its ratings. But CPS also went on a borrowing spree to fix and build new schools and as expenses grew and state aid remained stagnant the district turned to one-shot gimmicks like scoop-and-toss debt restructuring to manage. That left it again with junk ratings and a structural imbalance of $1 billion.
The latest turnaround began in 2016 and 2017 when new state aid and state help with pension funding came through, a local pension levy was restored and a new capital improvement tax levy approved.
The rating remains in junk territory but has been on the
The district still heavily relies on short-term borrowing. Fitch Ratings rates the district BB with a stable outlook. Kroll Bond Rating Agency is the only one to rate the district at the investment grade level of BBB-minus and BBB, with stable outlooks, depending on whether the bonds carry a special opinion on pledged revenues.
CPS operates on a $6.9 billion budget.
CEO
Lightfoot said an executive search firm will conduct a national search for CEO candidates and existing members of Jackson’s team can steadily guide the district until one is installed.
Jackson managed the district during a tumultuous period that spanned a teacher strike, a sweeping probe of the district’s mishandling of sexual abuse reporting, and then the COVID-19 pandemic that led to the online, virtual learning in the spring of 2020.
Former Mayor Rahm Emanuel tapped Jackson to in late 2017 take over after Forrest Claypool
Lightfoot kept Jackson in the post after her 2019 election and the two became close. Lightfoot called Jackson a “steady hand.” When pressed on why she was leaving, Jackson said she was tired, citing CTU struggles and the pandemic and wants to spend time with her teens. Jackson said she has no plans to lead another district but has accepted a senior fellowship with the Carnegie Foundation for the Advancement of Teaching.
