Sept. 11 (Bloomberg) -- Rahm Emanuel’s mayoral campaign message was subtle yet unmistakable: Vote for me and you won’t get another Richard M. Daley, who in 22 years bought labor peace, helping to drain cash reserves and create crushing union-pension liabilities.
Sixteen months into Emanuel’s first term, the teachers union in the third-largest U.S. city has proved him right in a way he didn’t intend. The new mayor has taken a tougher line and finds himself presiding over something his predecessor never did -- a strike locking more than 350,000 students out of their classrooms.
The walkout, the first by teachers in the city since 1987, has put Emanuel in a squeeze. The school district he oversees faces a deficit that may reach $1 billion, and resolving the dispute by giving in to the union risks embracing the kind of financial behavior he campaigned against.
“The problem is he doesn’t have the resources,” said Dick Simpson, a former city alderman and now head of the political science department at the University of Illinois at Chicago. “If it isn’t settled soon, Rahm looks like he’s not as competent as the Chicago mayoral tradition requires.”
City voters have a history of exacting retribution against first-term Democratic mayors who preside over debacles. They turned out Michael Bilandic in 1979 after he was blamed for mishandling the response to a blizzard that year. Four years later, they booted Jane Byrne, who clashed with firefighters in a 23-day strike in 1980.
Organized labor is a critical component of Democratic support in the city, and national union officials have come to the defense of the Chicago Teachers Union and its 26,000 members. AFL-CIO President Richard Trumka said Emanuel’s contract proposal “does not provide the elements necessary to ensure success for Chicago’s students or educators.”
Emanuel also failed to get support from one of his prominent former colleagues in Congress, where he served before becoming President Barack Obama’s chief of staff. Rather than choose sides in the dispute, Dick Durbin, the Senate’s No. 2 Democrat, said, “Chicago’s students deserve better.”
“Instead of getting an education, these kids are being put in the middle of a fight between adults,” Durbin, of Illinois, said in an e-mailed statement from Washington.
‘Up to Rahm’
Teachers and school support staff picketed again today as negotiations continued. A couple dozen strikers walked the sidewalk outside Chicago Public Schools headquarters in the Loop business district.
“It’s up to Rahm how long we are going to be here,” said Susan Hickey, a school social worker and a member of the union’s bargaining team. “People are resolved to get a quality day and a quality education for children.”
The union originally sought a 29 percent raise over 24 months while the board proposed 2 percent annual increases under a four-year contract. The district boosted the offer to a 16 percent raise over the four years and can’t give more, said Board President David Vitale.
Speaking yesterday at a church providing emergency child care during the strike, Emanuel urged the union not to punish students with the walkout.
“Don’t take it out on the kids of Chicago if you have a problem with me,” he said.
The strike has sent parents rushing to find child care, though the impact on businesses has been muted, at least so far.
“If this takes more than a week, then there’s going to have to be changes,” said Brian Battle, director of trading at Performance Trust Capital Partners, a broker-dealer that has about 150 people working in its Chicago office. “You can wing it for a couple of days, but the duration of the work stoppage is what’s going to determine our reaction.”
Emanuel has few options for addressing the strike, financial analysts and others who know Chicago’s budget standing say.
While the city is forecasting its smallest budget gap since 2009 -- $369 million in fiscal 2013 -- a richer union contract may increase the separate deficit already projected to reach $1 billion in next year’s budget for the school system, which Emanuel controls.
“The city has no money to give,” John Kenward, a Standard & Poor’s analyst, said from his Chicago office. The school district would “have to cut costs somewhere else to provide sweeter benefits.”
The Chicago Teachers’ Pension Fund had 60 percent of the assets needed to meet forecasted obligations, down from 67 percent a year earlier, according to its June 30, 2011, annual report.
“It will be more difficult to find more money since they don’t have any more reserves to tap into,” said Laurence Msall, president of the Civic Federation of Chicago. “A big drain for Chicago Public Schools is the $1 billion deficit next year, much of it driven by the pension system.”
Chicagoans have long memories for strikes that interrupt services. When firefighters struck in 1980, resentments over the dispute lingered for many years, Simpson said.
Daley, who was first elected in 1989, tried to lengthen the school day and change teacher work rules during his tenure, yet ended up surrendering on those issues and giving instructors raises. When money was more plentiful, the mayor could call unions into his office and strike a deal. That, Simpson said, is not so easy now.
Hard feelings were evident during the strike’s first day. John Cusick, a fifth-grade teacher and the union delegate at William H. Ray Elementary School in Hyde Park, said he and his colleagues resent what they see as Emanuel’s attacks.
“I’m a public servant, too -- why isn’t our story told?” said Cusick, whose school sits a block from the University of Chicago Lab Schools, a private institution where Emanuel sends his children and where Obama sent his when he lived in Chicago. “All we hear about education in America is teachers are bad.”
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