CHICAGO—The Chicago Teachers Union released the following statement regarding Governor Bruce Rauner’s notion that CPS should declare bankruptcy in order to “restructure debts” and pension payments, calling his remarks extreme:
“Rauner’s assertion that CPS should declare bankruptcy reveals his dangerous ideological extremism and his casual disregard for the damage that action would produce, both to the financial stakeholders (such as pensioners and bondholders) but also to the reputation and standing of CPS and the City of Chicago,” said CTU Vice President Jesse Sharkey.
Delivered during impromptu and candid statements at the Public Education Fund Luncheon, Rauner said CPS bankruptcy would allow the district to restructure its contracts and its debts. The bankruptcy of a major public institution like Chicago Public Schools would be unprecedented, even going back to the financial crises of the 70s and 80s. Squelching on billions of dollars of obligations would produce shockwaves throughout the entire city as hundreds of vendors, thousands of pensioners and millions of people would see contracts torn up, retirements slashed, and the schools stripped of their assets in bankruptcy court.
After running on a platform of “fiscal responsibility” and a promise to bring a businessman’s sensibility to state finances, Rauner has begun a public tour saying that he intends to bring financial solvency to Illinois by… declaring financial insolvency. “Don’t be fooled by the Carhartt jacket and folksy commercials—this is no small business plan—it is a leveraged buyout from the governor’s world of predatory high finance,” Sharkey continued. “CPS bankruptcy would allow the state’s chief executive to strip the public schools of the assets he wants to keep—tuition dollars and billions of dollars of real estate, while dumping the parts that everyone who works for a living really needs to put food on the table—pensions, contracts for vendors, and wages for CPS workers.
“Rauner is approaching the public schools in much the same way he approached a leveraged buyout at his hedge fund—borrow money and use it to take control of a company, then strip that company of its valuable assets,” Sharkey said.
Ironically, it was CPS’s takeover by power players from the corporate world and realm of finance (Tim Cawley, former CAO of Motorola; David Vitale, former president of the Board of Trade) which has led to the bond downgrades, creative accounting and troubles that have allowed Rauner to even get a hearing for this idea in the first place.