Illinois Stepping Up Pressure With Chicago Schools Investigation

  • State education board wants financial documents from district
  • Governor has called for state takeover of cash-strapped system

The Illinois State Board of Education is investigating the finances of Chicago’s public schools as Governor Bruce Rauner seeks to take over the nation’s third-largest district.

The city school system, whose board is appointed by Mayor Rahm Emanuel, was asked to provide the state officials with records including annual audits, contracts, monthly payroll figures and projected cash flow, according to a letter sent Thursday to Forrest Claypool, the district’s chief executive officer, and Frank Clark, president of the Chicago Board of Education.

“Our sincere hope is that the forthcoming investigation will identify opportunities for actions to be taken that will improve the financial condition of Chicago Public Schools,” according to the letter sent by Tony Smith, superintendent of the state board, and James Meeks, the board’s chairman. Rauner appointed a majority of the board.

The junk-rated school system’s deficit is projected to reach $1 billion a year through 2020 after years of relying on reserves and shortchanging pensions. Rauner, a Republican who is locked in a record-long budget impasse with Democratic lawmakers, wants to change state law to allow the Chicago district to file for bankruptcy and be placed under state control. He promoted Chapter 9 as a fix for the district’s woes in the days leading up to its bond sale this month, when it had to pay yields as high as 8.5 percent.

“The last time Governor Rauner offered his financial advice for Chicago Public Schools, Chicago taxpayers were forced to pay even more for our bonds, and we cringe at what his latest venture could cost our children,” Emily Bittner, a district spokeswoman, said in an e-mailed statement.

Illinois is facing its own financial crisis as the state is in its eighth month without a budget and has a projected deficit of more than $4 billion. Rauner wants structural changes like limits on unions, while Democrats are pushing for higher taxes on the wealthy. Rauner has said he would help Chicago’s schools if Emanuel, a Democrat, helps support his agenda with the legislature.

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