Inside Brandon Johnson’s shakedown of Chicago Public Schools
The mayor and his allies want $175M from the schools and a big loan to pay for it. But they’ve been blocked at every turn by more responsible actors – so far.
More than 325,000 Chicago kids head back to school tomorrow. But looming over first-day jitters, packed lunches, and nervous goodbyes is a district that’s been mired in chaos and dysfunction for over a year – stemming from the fifth floor of City Hall.
That chaos is now coming to a head, with a critical budget vote scheduled for Chicago Public Schools at the end of the month.
In this edition of The Last Ward, you’ll get a behind-the-scenes look at how the mayor is attempting to shake down the nation’s fourth-largest school district. And how his actions could trigger a “downward spiral” for CPS.
Plus, one easy step you can take to make sure that doesn’t happen.
The payday loan
Chicago Public Schools is the largest municipal issuer of junk bonds in the nation.
Pressure from Johnson and the Chicago Teachers Union for CPS to borrow even more – around $200 million, at high interest rates – has caused a near-constant stream of controversy to flow from the district over the last year.
Here’s an abridged timeline of what’s happened so far:
Board resigns en masse (Oct. 4, 2024) After pressure from Johnson and CTU to take out a high-interest loan, the entire seven-member school board resigned.
Johnson names new board (Oct. 7, 2024) At a press conference announcing his new appointees to the school board, the mayor lashes out at a reporter asking the new board members if they plan to pursue the loan.
Johnson’s board president resigns in disgrace (Oct. 31, 2024) Johnson’s pick for school board president, Rev. Mitchell Ikenna Johnson, resigns after a series of anti-Semitic, misogynistic and conspiratorial Facebook posts surface.
Chicagoans elect board members, reject CTU (Nov. 5, 2024) Chicagoans cast their first-ever ballots for a partially elected school board (10 elected, 11 appointed by the mayor). With one of the 10 elected candidates running unopposed, Chicago voters reject six of the nine candidates backed by CTU. These new board members are not sworn in until January 2025.
Johnson’s appointed board fires Pedro Martinez (Dec. 20, 2024) Johnson’s appointed board votes to fire CPS CEO Pedro Martinez without cause after he refused to endorse the loan.
New board takes office (Jan. 15, 2025) The 21-member, partially elected board takes office.
Johnson lobbies Springfield to make it easier to borrow (May 23, 2025) Lacking the supermajority board support needed to pass a budget amendment and take out the loan, Johnson’s chief Springfield lobbyist John Arena requests a change in state law to lower the vote threshold. He fails to move the bill. Johnson’s office tells reporters they never requested this change. But reporting from the Chicago Tribune shows that’s a lie.
All this effort raises a simple question: Why do Johnson and CTU leadership want the loan so badly?
When CTU was negotiating its collective bargaining agreement, the reason was simple: Get more cash on hand to pay for a more generous contract. But now that the CTU contract has been settled, there’s just one reason for the loan: Get more cash on hand for a one-time pension payment of $175 million, easing pressure on the mayor for his upcoming budget fight in City Council.
The $175M pension payment
At the center of this fight is a $175 million pension payment owed to the Municipal Employees' Annuity and Benefit Fund, or MEABF. The MEABF covers non-union municipal employees across the city, including in CPS.1
State law requires the city to make payments into MEABF. And that’s what happened for nearly a century, from 1921 to 2020. But during the COVID-19 pandemic, then-Mayor Lori Lightfoot asked CPS to start chipping in. The district agreed. It could more than offset the new cost with a windfall of cash from federal Elementary and Secondary School Emergency Relief (ESSER) funds.
But the pandemic is over, those ESSER funds are gone, CPS can’t afford a $175 million hit to their budget, and they’re not legally obligated to pay it. So last year, they didn’t.
But now that he’s staring down a $1.2 billion deficit in the city’s budget, Johnson is demanding that CPS make the payment. And he wants the school board to borrow money to do so.2
CPS Chief Budget Officer Mike Sitkowski said last week that taking out a loan to make the MEABF payment would send the district into a “downward spiral” of more credit downgrades, higher borrowing costs, and cuts to the classroom. That sentiment was echoed by the powerful Service Employees International Union Local 1.
But Johnson clearly doesn’t see financial harm as a downside. In fact, the mayor’s team and CTU believe further financial distress at CPS gives them leverage to demand more money from Springfield – akin to setting your house on fire in hopes of collecting an insurance payout.
The budget vote
The CPS board is scheduled to vote on their annual budget Thursday, August 28.
CPS CEO Macquline King announced her proposed budget last week ahead of that vote. It did not include the $175 million MEABF payment, nor did it include an irresponsible loan to pay for it.3
That sparked immediate backlash and arm-twisting from the Johnson administration. Eleven board members signed a letter demanding King include the $175 million payment and more borrowing in her budget:
Nine of those 11 members were appointed by Johnson
Olga Bautista, Michilla Blaise, Karen Zaccor, Debby Pope, Norma Rios-Sierra, Emma Lozano, Ed Bannon, Anusha Thotakura, and Cydney Sylvan Wallace
The remaining two were funded by CTU in their elections
And one of them let slip the extortionate rhetoric Johnson’s team is using to pressure the board to approve the loan, regardless of what King recommends.
The shakedown
Former CTU employee and Johnson-appointed board member Debby Pope joined a panel discussion this week hosted by Fox32’s Paris Schutz. During the conversation, Pope revealed one tactic Johnson’s team is using to bully board members into approving the loan. And Civic Federation President Joe Ferguson called it out.
Pope argued that if CPS refused to pay $175 million to MEABF, the city would then withhold hundreds of millions of dollars in funding from the city’s sweep of Tax Increment Financing (TIF) districts.
Pope: “I’m saying we’re not guaranteed to get the record TIF amount that we got in this past year if we do not fulfill what the city has expected of us … I’m talking political reality.”
But as Ferguson noted, the city is in no position to withhold TIF money. If the mayor sweeps TIF funds, which he inevitably will to close the budget gap this year, that revenue must go proportionately to CPS.4
Schutz: “I’ve heard sources from CPS saying that the mayor’s office indeed is saying perhaps we don’t give you TIF surplus now, because you’re not handling your own finances.”
Ferguson: “That’s theatrics. The reality is that the city itself is facing a $1.2 billion deficit. It needs a TIF sweep as much as other units of government that are taxing authorities. The money goes to CPS automatically if the city declares a TIF surplus and sweep for itself. Anything else that’s being said borders on being extortionate.”
How you can help
Your school board member’s vote on Aug. 28 could decide whether this borrowing is approved or not. Contact your board member here and tell them to reject Johnson’s demands for more debt.
Further, state lawmakers should bar CPS from issuing long-term debt to fund operating expenses, as is the case in Los Angeles schools. And if the district needs to borrow for other purposes, it should be required to seek voter approval.
In the news
I joined WTTW’s Chicago Tonight to debate Ralph Martire from the Center for Tax and Budget Accountability on the disastrous Chicago pension sweetener bill. You can watch the full debate here.
CPS employees account for one-third of MEABF’s liabilities.
Johnson and CTU both argued in the past that CPS shouldn’t be on the hook for the MEABF payment:
Johnson’s own transition report said CPS shouldn’t make the payment, reading, “$175M CPS pays in pension should be given back to the CPS.”
CTU opposed Lightfoot’s demand that the district make these payments, calling them “a despicable shell game” that “rips off CPS.”
CTU later called the payment “a shameful scheme to balance the city budget on the backs of CPS students.”
What I don’t understand is while facing a financial disaster the CPS refuses to close and consolidate the many partially empty schools it is currently operating? This seems to be the logical first step in any plan to restore fiscal responsibility.