Tax Breaks For the Wealthy While Poor Schools Are Closed? It's Just the Chicago Way

History was made this month when the Chicago School Board voted to close 50 "underutilized" schools in one of the nation’s largest public school systems. Even after a $400 million skinning of the budget last year, the mayoral appointed school board found an additional $144 million to knock off this fiscal year. The decision led to backlash from many community leaders, teachers, and parents, while some have even called the plans racist for the way they disproportionately affect black and Latino students. Making the rounds on Youtube this past week was a video of young CPS student Asean Johnson from the Marcus Garvey School, giving an impromptu speech at a rally to oppose the school closings.

In the speech, Johnson echoes the statements of CTU President Karen Lewis who said in a press release after the closings, "Since 2001, 88% of students impacted by CPS School Actions are African-American. And this is by design." This is a staggering number considering CPS demographics, of which African-Americans make up only 41.6%. However, CEO of the school board Barbara Byrd-Bennett has taken particular offense to these accusations, saying, "That is an affront to me as a woman of color and it is an affront to every parent in our community who demands a better education for their children."

                

Considering the demographics of the school board, claims of racism seem a bit outlandish, but the fact remains that some kids are disproportionately feeling the cuts.

Questions have been raised regarding what assessments these school closings were based on. In the past decade, the school board has closed 100 schools, mostly under the guise that they were "underperforming." However, in that same time frame, they have opened 60 private charter schools, which have yet to turn out better results than traditional public schools and, in some cases, perform even worse. The CPS Board of Education has switched up the rhetoric for this round of closings though, with "underutilization" now the determinant, a measure based primarily on class sizes. The formula for deciding which schools are underutilized has more than a few flaws, according to some independent reports, but the biggest slap in the face for teachers and school reformers may be the fact that the CPS formula insists on 30-36 students being the "ideal" class size. These standards are well above those of charter school classrooms and greatly exceed the average of 23 students at the private Chicago Lab schools. The children of the mayor, former CPS board member Penny Pritzker, and President Barack Obama all attend Lab schools. Smaller class size is a reality which public school teachers have been fighting for for years, but have yet to see. 

           

This historic struggle between the community and the unelected CPS Board of Education has mainly gone ignored on the national stage, but this scenario goes far beyond budget disagreements in Chicago. The political actions here resonate all the way up to President Obama's cabinet and set a precedent for the downfall of unions and public education. In a city where 60% of respondents list "government corruption" as their top concern, this is politics as usual.

         

The logical first question here is, "Why can't Chicago public schools get it together?" Some have pointed to a perpetual deficit that is further drained each year by a little known urban-development program called "Tax Increment Financing." In 1977 the Illinois legislature approved the TIF program to be used as a last resort in the redevelopment of the most blighted and economically depressed districts. The way TIFs work is complicated, but the basic process goes something like this:

- A municipality decides to establish its own TIF district and their property tax values are assessed.
- These values are used to establish a 23-year revenue cap.
- For at least 23 years, that municipality does not receive any property tax revenue generated above the original assessment.
- Instead, any excess revenue generated by redevelopment and higher property taxes is skimmed off the top and put into a big pot for all the districts to draw from.

The whole idea is, as successful districts continue to see their real property tax revenue increase, that extra revenue can be diverted to other districts that need redevelopment. This way, investment is not perpetually focused in the most affluent areas and can instead be distributed to those who need it most. The reality is a bit murkier.

Problems arise when you consider that normal taxing bodies (schools, parks, etc.) cannot receive TIF funds except under special circumstances. So not only do they receive absolutely no increase in revenue from property taxes for 23 years, but schools have a hell of a time trying to get a piece of those TIF funds. This fact, along with other general opposition, led to slow growth of TIF revenue throughout the ‘80s and early ‘90s, but in 1995, Mayor Richard Daley managed to win control of the Chicago School Board, rechristening it the “School Reform Board of Trustees” and abolishing its direct election. With the power to appoint his own school board members, along with an aggressive promotion of the TIF program, an explosion of new districts began in 1996.

       

Each year, TIFs around the city bring in about $500 million, half of which would have otherwise gone to Chicago Public Schools. However, only 28 schools have received TIF funds since the program started, totalling about $860 million. According to the CPS' own socioeconomic breakdown, 36% of schools receiving TIF funds are in the highest socioeconomic tier. This is despite the fact those well-off schools make up only a quarter of all Chicago public schools. Even worse, 25% of schools receiving funds are in neighborhoods with higher median household incomes than the city's average. Maybe the most striking statistic in the allocation of TIF funding for schools is the fact that selective enrollment schools, especially those in the mayor's Modern Schools Across Chicago program, receive 24% of TIF funds while enrolling only 1% of Chicago public school students.

Budget approvals released for the fiscal years 2009-2011 show a very distinct inequality and exploitation of what has become known as the “mayoral slush fund.” Eight of the ten districts set to receive the most in TIF funding are in prosperous areas of Chicago. More than $1.3 billion in TIF cash will be spent on other various projects in this time frame, despite a perpetual deficit in an already bare-minimum school budget. Chicago Public Schools alone faced a $665 million deficit this year, which brought on $144 million in cuts. As the deficit cuts deeper and the TIF program brings in more money, questions have naturally shifted from "How much is being taken away?" to "Who exactly is this helping?"

               

Though the allocation of TIF funds to public schools seems wildly disproportionate, school funding makes up less than half of the "public works" projects the TIF program helps fund, and even less of the overall allocation of funds. So where else does this money go? Unfortunately, the program has remained, primarily, undisclosed to the public, but here are a few controversial TIF disbursements that have made the news:

- In 2009, $8 million went to Mayor Daley's pal Robert A. Winslow, of U.S. Equities, to develop the French Market in Ogilvie Transportation Center
- MillerCoors received $6 million to build a new headquarters, 28% of the total cost.
- Republic Windows & Doors received $10 million in a similar deal, before packing up in 2008 and leaving taxpayers with the tab.
- The $40 million the city spent on the Hired Truck Program debacle.
- $4,101,740 has gone to 31 private organizations through the "public benefits clause" hidden in the TIF program.

                 

What was introduced decades ago as a last resort to fight socio-economic blight has since become a program that takes from the already starving taxing organizations in the community, and gives to private investors and corporate juggernauts. Chicago’s modern approach to economic development evokes the very economic policies of the Reagan-Thatcher era. Pump capital into the well-off, "engine-churning" districts and let it bleed into the lands of the downtrodden. On paper, it doesn't sound like bad policy, but after years of this, isn't it becoming apparent that taxpayers aren't getting the most out of million-dollar subsidies going towards billionaires?


The most recent outrage has come after Hyatt received $5.2 million in TIF funds to build a new hotel as a part of the Harper Court redevelopment plan. At the same, seven schools that surround the new project had $3.2 million cut from their budget. And if that wasn't enough, billion Hyatt heiress Penny Pritzker was one of the seven appointed school-board members who approved these cuts. This serves as such a brilliant representation of how the TIF program has been used over the years. Pritzker has been tapped to serve as the next Secretary of Commerce, which would make her the second CPS School Board member to be appointed to Obama's Cabinet. Of course, the man who controls the board was a big player in the Obama administration as well. The TIF program has become the epitome of cronyism in Chicago and, while this is not new for the city, it continues to support a scary trend in Washington. Despite all of his rhetoric, Obama and his deep ties to Chicago seem to be the perfect representation of the "City of Big Shoulders" and its toxic political culture.

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