Paul Vallas took some heat while running for Chicago mayor in 2023 when he said on our podcast that he agreed with our longstanding view that Chicago Public Schools should be entirely reconstituted.
Vallas was right then and it’s more true now. That’s exactly what’s truly needed. With CPS and Mayor Brandon Johnson’s policies toward it now being mocked nationally, might Springfield lawmakers finally have to courage to face that reality? No, experience tells us, they almost certainly won’t. Just for the record, however, here’s a reminder of what should be done:
– Create a new entity, or perhaps several of them, to run the schools.
– Redirect to the new entity the taxes and other funding now going to CPS.
– Transfer needed assets to the new system, not including empty and badly underutilized schools.
– Freeze the Chicago Teachers’ Pension Fund and, instead, begin funding a new, affordable retirement plan.
– Terminate all CPS employees and rehire the good ones on terms affordable for the city.
That’s what Michigan did with Detroit schools at about the same time as Detroit went through its bankruptcy reorganization. In fact, we wrote over nine years ago explaining why CPS was even better suited to being reconstituted than Detroit was. It’s a concept frequently used in the private sector. General Motors, for example, did the same thing in its bankruptcy. The GM you know today is actually a new company formed in 2009 to take over assets of the old, insolvent GM. For CPS, a bankruptcy proceeding might not even be necessary.
What that would take is a bill from the General Assembly. The new law should also include revisions to statutes that made the Chicago Teachers Union so powerful, ending the tragic nightmare CTU has imposed on the city and students for decades. That could include eliminating the risk teachers will strike over their current, exorbitant contract demands. Ideally, new legislation would also include a school choice program making the new CPS schools one of the options available to students and parents.
The immediate problem facing CPS is the need to kill Johnson’s plan to take out a high interest, short term, $300 million loan to cover operating costs, which has been correctly ridiculed as a “pay-day loan.” To accomplish that, Johnson recently installed his own slate of school board members to replace a group that resigned. The new legislation could fix that as well, stripping the mayor of his power. The majority of the board should be appointed by adults with expertise in education and finance. Debate who should make the appointments if you want, but that’s not Johnson.
On the other hand, maybe a better option would be to first let the $300 million loan go through. Take the money and apply it somewhere sensibly, then reconstitute the school district. That means stiffing the lender on the new loan. Whether that would work is an open question — a detailed review of the loan terms and lien situation on CPS assets would be needed for a clear answer.
If stiffing lenders sounds harsh, it’s not. Any lenders participating in a loan to the current CPS will know full well of the risk they face, whether from reconstituting the school district or having it go bankrupt. The same goes for other, earlier lenders. They assumed known risks. And please don’t claim that would render a new, reconstituted CPS unworthy of new credit. The opposite is true because the new entity would be properly funded to meet reasonable expenses, free from legacy debt run up by the old CPS. That’s how the world works. Deal with it.
Hardball, comprehensive solutions to Chicago’s failing schools are years overdue. Just don’t think that means our ruling class is ready to act.
Editor's note: This article was originally published at Wirepoints.