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CPS's Debt Truth Deficit

"To help sell their plans for a district shakeup, CPS leaders have touted a variety of school improvements," Sarah Karp reports for Catalyst.

"But paying for those improvements will mean taking the district deeper into debt at a time when the district is already facing substantial debt service obligations."

It's also counter to the rationale that school closings are necessary to close a (supposed) $1 billion deficit. Projected savings, if they materialize (and that's a big "if" given the well-documented history of how much closings actually cost), remain off in the distance.


"CPS leaders have repeatedly said schools had to be closed because of a projected $1 billion budget deficit. Yet one of the reasons CPS is facing such a large deficit is its already-existing debt: In the upcoming fiscal year, the district's payment on principal and interest is scheduled to go up by about $100 million to $475 million.

"Some of the expenses that CPS is categorizing as capital spending also are a bit curious. For instance, CPS leaders want to spend $40 million on new textbooks aligned to the Common Core. However, textbooks are commonly considered operational expenses, says Bobby Otter, education and fiscal policy analyst with the Center for Tax and Budget Accountability.

"[CPS spokesman David] Miranda, however, says that textbooks are used over the course of several years and therefore can be considered a long-term investment."

Like I said, CPS closings only make financial sense if you use Groupon accounting.


CPS debt was downgraded last fall.


Linda Lutton at WBEZ previously reported that "Chicago Public Schools will save less money by closing schools than the district originally indicated. The difference has to do with the way CPS plans to finance building upgrades at receiving schools."

Lutton is being generous to say "save less money," which presumes money will be saved in the first place. Nonetheless . . .

"CPS officials have said they will save $43 million annually in operations by shutting down 54 schools. That's just under 1 percent of the total operating budget.

"But the cost of debt service on the new bonds is $25 million annually for 30 years, CPS says. A district spokesperson confirmed CPS did not factor in debt service costs when calculating savings to be achieved by closing schools."

They didn't count the debt service!


It gets better:

"But he bristled at the suggestion that the estimated savings from closing schools should be lowered."

Stop doing math!


It gets better:

"'It wouldn't be accurate to say that if we weren't consolidating underutilized schools, that we wouldn't have any of these costs,' the spokesman said."

Excuse me, I speak CPS:

"It wouldn't be accurate to say that if we weren't closing schools we wouldn't have all of the costs associated with closing schools. If by 'accurate" you mean the consensus definition of something that is true."


It gets better:

"He said he is authorized to speak to media but not to have reporters print his name."

To save him from embarrassment.


Best guess: It's David Miranda.


Also, Curtis Black notes in his "Reality Check: Closings Schools, Saving Money?" that a Pew study found that "found that districts across the country consistently overestimated savings and underestimated the costs of closings. "

It's become clear that this isn't about saving money or increasing student achievement or more efficient utilization - the rotating rationales used by Rahm Emanuel and Barbara Byrd-Bennett depending on which one is most convenient - but about Emanuel pursuing a political agenda which he hasn't kept secret but seems to be forgotten by a mainstream media afraid to just say it: reducing the footprint of CPS while increasing the number of charter schools in the city.

That's not an agenda I agree with, but folks have a right to believe that's the right way to go, though it's not at all clear that Rahm's motives are purely in the interests of the children. The real problem is shrouding that agenda in a cavalcade of lies. Then it's not a fair fight. But then, this is Chicago.


Comments welcome.


Posted on April 17, 2013

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